it's how we care for our patients- like job. his team at ctca treated his cancer and side effects. so job can stay strong for his family. cancer treatment centers of america. appointments available now. welcome, everybody the trade war escalating at a fever pace this evening. president trump further raising tariffs on chinese goods in rapid response just this morning boosting their tariffs steve liesman is live at the fed summit with immediately reaction from one of the central bankers of the world mark carney steve, take it away. >> thanks very much, melissa here at jackson hole with mark carney president trump escalated, talk about the global effects of the trade war between the u.s. and china? >> well, obviously, can't

comment on just today's effects, but if we take a step back, what has been happeningthe direct effects between the u.s. and the uk or the u.s. and china of the actual tariffs and, you know, they're starting to get up towards potentially over the course of the two, three-year period about one percentage point lower for u.s. gdp if they all remain in place. there is the direct effects. what is happening globally is a confidence effect on business. business confidence, not just in the u.s. and china, but all across those supply chains more broadly because it's not, as you know, just a series of measures between those jurisdictions. we had issues around auto and still have issues around steel and we have issues in terms of the technology complex, if i can put it that way. and those effects are at least as material as the direct trade effects and those effects are impacting all of the economies around the world and that's what started happening. now that is starting to play

into the outlook for the global economy and whether you're directly involved or not, it is impinging on the outlook and, for example, the uk, it is starting to affect >> i think people need to understand, you were the governor back in canada before that goldman sachs and played a critical role in the global response to the banking crisis i'm seeing that background up for the next question. are global central banks, do they have the tools to address the fallout from an extended trade war and how are they positioned right now to address overall global weakness? >> well, let me start with the second bit which is we, obviously, have less policy room than we did in 2008 than we did several years ago. rates are very low certain countries are doing the quantitative easing. there is less room the central bank, the major central bank with the most room is the fed because of the strength of the u.s. economy so, we have less room. but we do have room and we do have an ability to use that

room the judgment has to be is when you deploy that buyer power. and the question that is beginning to emerge because of the scale of the trade effects is are a number of central banks going to ease policy for their own reasons. and then collectively will that provide an offset? the one thing that won't happen is that changing the level of the bank rate in the uk, for example, doesn't change materially the cost of capital for a business in the uk and certainly not a business in the u.s. or else where 25 basis points does make a difference there what it can make a difference to is demand in the uk. and demand in other jurisdictions and it's that effect which also provides some stimulus so, the direct effects not just of the tariffs, but i really would emphasize the uncertainty that is being created by this

series of measures that are happening and happening in a way that is somewhat unpredictable >> so, we have our set of problems that you say we ship to you. you have your set of problems which fed chairman jerome powell mentioned today. brexit being an issue for the united states. i want to ask you if you can keep your problems over there, but i don't think that is the right question how much has it affected the uk. is it substantially responsible for the negative second quarter outcome that you had in your growth numbers and do you foresee that continuing? >> well, the short answer to the question is, yes but, let me break it into two parts which is in the very short term, the first quarter was stronger than people would have expected and second quarter is negative and third quarter we think is going to be positive. and that up and down between those various quarters those are companies building inventory in the first quarter because they

thought trade disruption and running them down in the second quarter and auto plant doing the same thing it's noise it's real activity, but it's noise in terms of the underlying pace in the economy. let me step back to the second b bit how is the economy doing it is doing pretty well. rates lowest in 45 years and inflation is basically a target, business investment and all of that has happened in a world where there's been a lot of uncertainty because of brexit and what shape it is going to take it's an analogy to the trade war. this gets to what we were talking about a moment ago what can monetary policy do in those circumstances? what we did in the uk after the referendum because we brought them and did a variety of things and that is supported other aspects of the economy now, business inevestment is running 25 percentage points

below its trend. s. businesses in the uk have quite r reasonably said, they decided to wait and see, what are the new rules of the game going to be. to go back to globally, that's part of what is happening worldwide is people are saying, well, okay, i've got exposure to chinese supply chain or u.s. let me see where this settles out and that's why it's having a bigger effect. >> i have to ask a direct question here. you only have 75 basis points of ammunition here in your primary tool, your interest rate looks like you're stubbornly holding on to that is that ammunition in case there is a hard brexit >> a couple the uk economy can take one is there is a deal and there is a deal and some degree of that economic relationship, deep economic relationship is retained in that world, we're starting from basically a full employment and inflation at target and businesses with a lot of fire

power on their own balance sheets and good financial conditions and we're likely to see some of the catch up of that that's a world i know it doesn't fit with the theme of the day, but that's a world where we actually would probably be raising interest rates and limited pace, gradual extent, vice versa but, you get the point in a world where there is no deal and there's no transition, the other extreme, which is a possibility, not a given, but a possibility. then in that world we would expect that we're goingto lose demand from europe in the short term probably be an adjustment domestically, as well. consumer spending. demand goes down we'll have to make a judgment in that world because the supply capacity of the economy, the loss will go down. this is an economy that is very well integrated to europe and it's going to take a while british businesses are very flexible and labor market is flexible and you have to redeploy that and that will take some time and the balance of

those two effects. on balance, i've said this before my personal view is we probably would ease in that world that scenario. but it's not a given and it depends on how it shakes out >> so, changing gears last issue, governor carney, i really appreciate your time and thoughts on this you dropped a bombshell in the luncheon there it was almost like a mike drop you are exiting this job and you said we need to go to a global, virtual currency it's a 23-page speech. it's very heavy. give us the thumbnail. >> i want to know, did you just read the conclusion of the peacpeac speech >> i read 14 pages and jumped to the conclusion why can't the dollar be the global currency? >> the dollar is the global currency and the u.s. share of the global currency is reducing. the dollar share of payments, not just financial payments but a lot of payments between

countries that have nothing to do with the u.s. are in dollars. and what happens in situations like we're in today where the u.s. economy to its credit is relatively strong is doing better and the fed is doing the right thing which is, they have adjusted policy and tightened policy as it was strengthening and now the fed is doing the right thing. but they have adjusted policy relatively strong. that means rest of world policy is tighter than it needs to be and that feeds back on the u.s. economy in a way that ultimately slows this economy and it leads to a sub standard outcome and in a world where you only have limited policy space, it's a dangerous place to be so, the trade issues we're talking about are reinforced by the structure of the monetary system you asked a big question but now the issue is, you don't just jump to something new overnight. and what we want in a multi-polar world. i think we'd agree we have the

european engine and u.s. engine of this economy multi-polar world. you need a multi-polar currency. the question is how do you get there? i laid out some ideas on how you would get there. >> all of the pressure on the different in growth around the world would not fall on the dollar exchange rate it would be spread out if it was a global basket of currencies >> it would be spread out global basket of currencies and better as the system for a whole. and it raises the equilibrium and gives people who are watching greater returns on their savings. >> certainly we're thinking about. governor carney, good luck through the brexit process and the trade wars and the growth issues out there >> nk ththanks, steve. >> we're at the nasdaq long list of things to wish them well on. steve, thank you steve liesman with mike carney

what do you make of this in the prism of the most recent ramp up in trade tensions with china >> i think one of the things he just said, i found it kind of interesting myself he was just talking about how central banks and maybe the fed have less basically wiggle room or ability now than they had perhaps before the credit crisis i'm not entirely sure that that is true. we have to first think about how much of an impact we think fed can have and what are we actually trying to talk about. an issue of trying to support, you know, gdp in the united states and focus on employment and inflation and are we trying to focus on asset prices that's usually what we're talking about on this show i think it's kind of interesting because we've seen unconventional policy and we have unconventional policy like qe and i'm not suggesting that i'm not sure i want to see us go back to that but i think when we have unconventional policy that we can implement, a lot of room

there is almost unlimited room >> so, basically, just thinking about the amount you can cut that's deceptive >> entirely deceptive. that's right >> we can reverse course on the balance sheet, i suppose that would be another tool remember the magnitude of what we were facing in '08. we had more tools and the magnitude of the crisis, this is nothing remotely close to that one thing that is interesting is just thinking about brexit as not that much of a microcosm a smaller version. you have a lot of uncertainty there, right a date that might be certain, but you don't know how it will shake out and there are the fifth largest economy in the world. so that will be interesting to see. the point that i thought was interesting, you talked about business investment being down 25%. we haven't seen that here, but that, that's where i'm afraid that uncertainty creates uncertainty. i'd much rather eer have a deae if it's not a great deal even rather have less back and

forth. just, i guess it seems to me the actions havant been so well thought out. and wish that were not the case. i think the president does himself a disservice particularly because he cares about the market >> one thing that keeps the economy strong and focus on the business side and, obviously, decisionmakers will want to have some clarity some kind of path ahead. when you have absolutely no idea which idea you're going to lurch in next. not the magnitude of the tariffs necessarily that upsets me what worries me is decisionmaking that has greater. here is what is coming up next stocks get slammed today, but if you're betting on a bounce, mike is away to buy the dip for less plus, calling all options action pass. reach into your pockets, grab your phone and tweet us your

questi question @optionsaction. we'll tweet it on air. ♪ ♪♪ ♪♪ ♪♪

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designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you buy a new samsung note. click, call or visit a store today. i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade welcome back to options action in the last hour, president trump boosting tariffs on $150

billion on products from 30% to 25% and tariffs on another $300 billion will now be 15%. that's up from 10% stocks already getting slammed today with the dow falling more than 700 points at it lows after china just this morning imposed new tariffs on american goods. still, if you're betting on a short-term recovery rally monday, laying out the best way you can buy this dip he's over with the action. mike, take it away >> one reason why people might buy a dip is rebalancing your portfolio. if you have the equities portion go down and you might be looking to rebalance and that is one of the reasons why people are looking to buy a dip generally we're long equities and i have never seen a prolonged bear market where everybody in the business is doing well generally long equities and generally the economies is growing. even if the news we had, that turns worse, it's not uncommon for us also to see bear market

rallies and relative to the volatility that we're seeing, we're not actually seeing options premiums as high as they might otherwise be give you some perspective. we averaged just under 1.5% intra day moves. the vix sitting around 20 and should be 50% higher than that when you're seeing moves of that kind of magnitude. trying to take advantage of the fact that options premiums have not gone up as we might otherwise think and try to make a bullish bet. maybe looking for a pop back to the 300 level. the trade that one could make here i was looking out to september you could buy the 295, 300 call spread you would be spending about 1.20 to put that trade on so, the payoff is going to be better 3-1 if we get a move up to 300 which is approximately where we were at the ginning of this month. this is something that works both ways. if you find yourself overallocated to stocks and look at spy options as a policy way

to hedge implied volatility should be higher given the moves we have seen >> karen, what do you think of this trade >> i think it's interesting. i wouldn't be surprised to see things bounce, right we could get different kinds, just as we get rhetoric that isn't good we can certainly get rhetoric that is good at g7 mike would you be planning on sort of selling, not waiting until the end but selling this spread on a bounce >> selling it on a tweet maybe >> exactly >> that's actually probably all it is going to take. we're really getting whip sawed around what is going on in this particular tariff battle that we're seeing is we're getting a tweet and then china is reacting all it really would take is something from washington, not beijing, for u.s. equities to get a little bounce. some sort of easing of the tensions i think anything like that could cause a little bit of relief rally, even if we don't get a permanent fix and that's what this trade really is you're trying to play for some

sort of bounce off of here if you think we'll see an all-clear time anyone soon >> your inclination is that you wouldn't actually put this trade on >> well, i would put this trade on and probably will put this trade on we'll see, that's one quick thing. we're friday night news is coming out fast and furious. if the market somehow makes up the gap that we saw lower this afternoon, this trade may not make sense by that point we, obviously, have to basically play it minute to minute and see where things are futures are higher sunday night, the trade may not make sense on monday morning >> a whole day in china during which the chinese could actually respond to what president trump has already tweeted this evening. i mean, a lot can change between now and monday morning >> yeah. it's funny that a trade we feel like, oh, i have 12 hours where i'm not able to trade it, is that what you're saying? >> right >> well, you do have time, though

it's a september expiration. you have 10, 15 trading days to have it work >> all right up next, escalating trade options taking down stocks we can tell you how you can do some damage control. don't go anywhere, much more damage action after this ♪ ♪♪ ♪♪ ♪♪

what do you look for i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work.

no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ welcome back to options action president trump hiking tariffs on chinese goods comes after china issued new tariffs on billions of dollars on american goods. the markets got slammed after this morning's announcement from china. if you are wondering how to hedge the gains you made to be recent winners mike is here with a playbook mike >> i'm taking a look at the consumer staple sector this is one of the best performing groups. a flight to safety type of an issue. the thing that makes me nervous is that, number one, we obviously had a number of consecutive weeks of very poor performance in equities. relatively good performance in the sector and the sector to me doesn't look particularly cheap.

if we take a look at it on a priced earnings basis or an absolutely basis price and trading at all-time highs. p/e is close to its ten-year highs. enterprise and it's basically at all-time highs and this is a situation that i think leaves one a little bit vulnerab vulnerable it was a safety trade. i'm not sure it is as safe at these levels staples because low volatility and options premiums are not as elevated as they should have been anyway. it sets up well to consider putting on a hedge specifically. i was taking a look at the october 60 spread. that would cost $1.25. that's the type of ratio we are looking at so, this is protection that will kick inpretty quickly. if you're holders of names in the space, you'll expect to get dividen dividends. this one is going to pay 30 some

odd cent dividend if you own an xlp and this will drop that price. that is a good way to hedge it >> do you like this trade, careen >> i do. i think it's interesting i mean, a lot of volatility. which i guess is exactly what you're trying to xacapitalize o. >> in terms of staples in terms of defense in general. >> it's proven itself as far as that goes. one of the areas along with utilities and some of the other spots that people have been looking at as safe sahavens if we get a bounce or reversal in the news flow, you could see weakness here certainly on a relative bases and it doesn't cost much ahead. why not. time for the final call. your last word mike, what do you say? >> do not use credit spreads >> karen >> i would probably be looking to sell some target 110s they don't have earnings by the

time the expiration. you don't get that volatility, but, i think it protects you ten points up from here. i like the stock, but i feel like the options >> that does it for us here on "options action. catch us back here next friday at 5:30 p.m. eastern time. >> sponsored by thinkorswim by td ameritrade.unds lik and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you

through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade - [narraadvertisement forg the nuwave bravo xlid sponsored by nuwave, live well for less. is all the clutter in your kitchen starting to look like an old junkyard? sick of spending hours cooking, only to serve mediocre meals lacking in flavor? wish your family would spend less time whining and more time dining? well, now they can! with the new bravo xl, the world's first digital smart oven with flavor infusion technology. it's a breakthrough in culinary creations! coming up next, you'll see how bravo's compact design cooks large family meals in record time!

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