♪ our stocks set for a major comeback on a monday the markets coming off another big drop on friday but green is the color of the day because what a difference a phone call makes. new comments for the president this morning signaling a possible call in the trade cold war. we'll tell you what he has said that is moving markets. demonstrations in hong kong turning violent over the weekend police using live ammunition and water cannons all to push back protesters we'll bring you the very latest on that developing story it's 5:00 a.m. on monday, august 26th and "worldwide exchange"

begins right now ♪ good morning, good afternoon or good evening and welcome from wherever in the world that you may be watching i'm brian sullivan and happy to be back with you on what will no doubt be a very busy monday. here is how your money and the global markets are setting up their day coming off that. friday, 623 point drop another wild session last week now futures right now if you're waking up, dow, that is not a misread on the screen. we are solidly higher. dow futures are up 281 points. what makes this even more remarkable is that just about two hours ago they were down more than 100 points, but they made more than a 300-point swing higher in the last couple hours. all that as president trump said that china is ready to come back to the trade negotiating table look at that, that was about 3:00 a.m. in the morning when our hard-working staff is

already here, by the way, futures making a big turn up and this is where we stand right now. what a turn. president speaking on the sidelines of the g7 summit in france earlier today listen >> gotten two calls and very, very good calls. very productive calls. they mean business they want to be able to make a deal it's very important that -- it's very important for them. they lost 3 million jobs it's why president x ziri is a t leader he understands that. it will be great for the u.s. for the world. he's able to do things that other people aren't able to do. >> if you didn't hear that the president saying that china called twice and apparently ready to come back to the negotiating table. it is not just stocks. the world is closely watching china's currency that 2 to 3%, that trades really

fryly. now at its lowest level against the u.s. dollars since 2005. we're at 7:15. the lowest in 14 years also we have been watching and continue to watch bond yields. 1.45%. basically i would say they're inverted slightly, but the two and the ten effectively exactly the same right now but pretty amazing 1.45%. because we are the worldwide leader in business news, we've got worldwide coverage of all of this this morning. matt taylor in singapore, joumanna bercetche live in london, aimen javers outside the g7 summit in france and eunice yoon the reaction in beijing matt, let's begin with you >> hi there, brian it's all about timing because a number of these asian markets

had already closed for the day before we got the comments out of president trump speaking on the sidelines. didn't benefit from that turn around you're showing us in u.s. futures. picking up from that decline we saw on wall street on friday but you were mentioning some of the other classes the japanese yen which had been hit particularly hard post friday making a bit of a comeback as we saw all these headlines concerning china and trade shanghai composite, that closed just as the president was speaking saw 1.2% decline you mentioned the juan, lowest point in 14 years. the other reads on shore for instance coming back as well getting a bit stronger on the back of the comments coming out from president trump you mentioned hong kong, this was the underperforming of the day down by 1.9% it benefitted from the bounce back in u.s. futures because we were down by 3% at one point earlier on in the day on the back of that escalation we saw

in violent protests with water cannon and live ammunition used the markets there in hong kong closing down as you can see by 1.9% on the day. brian, back to you. >> matt taylor, thank you very much. now to joumanna bercetche in london where they are actively trading on these headlines joumanna, i was listening to you in on the drive this morning i noticed we had a big turn there as well. >> yeah. so exactly those comments that president trump made actually happened right as the european market was opened. so we were pointed to open negative as were u.s. futures, but as he made those comments to the effect of a call having taken place between china and the u.s., things started to turn in europe. this is the picture, the european indexes that are open today are trading in the green you won't see the ftse 100 because it is technically a bank holiday but we're here working following the european markets the german dax is relative underperforming. we had german data out this morning, the ifo data talking

about manufacturing, construction and services. so while we have been very much focussed on the trade war narrative, don't forget the data in germany has been on the decline and some people talking about a technical recession in the next quarter keep an eye on that. the italian index up half a percentage point remember, it's a big week for italian politics the government has until the end of tuesday to consult with the various political parties we may be seeing a new italian government as soon as friday of this week but we'll be keeping an eye on that and certainly t is a focus for european investors. back to you, brian. >> we're glad you're there, jouman joumanna thank you very much. to france where president trump said that china apparently is ready to come back to the negotiating table. aimen javers joining us now in france at the g7 summit. >> good morning, brian

that's all the information we have is the president making those comments before a bilateral meeting here we don't have any other detail from white house officials and we have been pressing some of them who are traveling with the president for more information on exactly what took place over night between the u.s. and chinese sides. let me play that sound bite again. that is all the information we have the president's words about a phone call from the chinese side here is what he said >> china called last night our top trade people and said let's get back to the table so we'll be getting back to the table i think they want to do something. they have been hurt very badly but they understand this is the right thing to do. i have great respect for it. this is a very positive development for the world. >> i emailed the white house press secretary for additional details on what exactly transpired last night and what she says is simply this, she has nothing further to offer right now other than the president's remarks. brian, not a whole lot of

information coming from the u.s. side other than an up beat message from the president of the united states and beginning of a monday here in france in which after a weekend in which the president ruffled some feathers here in biarritz as he was going through the process of the g7, all the various meeting at one point seeming to suggest to reporters he was having second thoughts about the trade war with china in the wake of the that market move we saw on friday white house officials that'sening to clean up those remarks after the fact although they insisted they were not cleaning up the remarks. saying what the president meant was not that he had second thoughts on being too tough on the chinese. but had second thoughts on not being tough enough on the chinese. so, some confusion here among aides and the president over the

weekend. they seem to have everything ironed out now and we'll try to get you more information about what happened between the u.s. and chinese as we go through the morning, brian. >> i know the kmchina and trade comments will get actual the attention. the president not just commenting about china did he also make comments about iran and i would imagine those comments may also contribute to the big turn in the futures we had this morning we saw the surprise announcement yesterday. not clear the u.s. and the iranian sides will have any conversations whatsoever but she did say yesterday that the president reiterates his commitment to engage in talks with the iranians with no preconditions whatsoever this is a president who wants to talk to the iranian side the iranians are here in town. we'll see what happens as we go through the day. >> aimen javers in france. appreciate it. thank you very much. >> you bet. for its part, china also

responding to the latest trade developments its currency falling to the weakest level in nearly 20 year. eunice yoon covering all that live from beijing. eunice, good evening. >> thanks so much, brian the chinese foreign minister said it has not heard or is aware of any u.s. china phone calls between the trade negotiators. it also went on to say it has not heard of a call by china to restart the trade talks. now these comments come after the chief trade negotiator from the chinese side had earlier today said china is willing to resolve the trade dispute via calm negotiations. just how calm those negotiations are still up in the air. and this is after president trump had said at the g7 and suggested that he could possibly declare a national emergency if

needed which could potentially put a lot more pressure on u.s. companies because it would mean they would have to cut off their ties with chinese companies. a lot of people in the business community are very concerned about what they're seeing. they're worried they might have to pay the price of these tariffs from the chinese side as well as from the u.s. side but also because they're currently worried about retribution. the state media, though, has been flagging that u.s. companies might not have as much to worry about saying that a lot of these companies are very dependent on chinese consumers and saying that at the end of the day they might want to stay here because they could be potentially seeding ground to some of their global rivals. brian? >> eunice yoon live in beijing eunice, always a pleasure as well thank you very much. we're just getting going on this very busy monday. up next, the number one factor that matters to the markets and your money is it china?

is it the fed? is it technicals we have the answer. and later, chaos gripping hong kong over the weekend anti-government protests turning violent. the very latest on that when "worldwide exchange" returns right after this we call it the mother standard of care. 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. cancer treatment centers of america. ♪ when you have nausea, heartburn, ♪ ♪ indigestion, upset stomach, diarrhea ♪ try new pepto liquicaps for fast relief and ultra-coating. ♪ nausea, heartburn, indigestion, upset stomach, diarrhea ♪ get powerful relief with new pepto bismol liquicaps.

♪ good morning and welcome back or welcome. stock futures they are flying right now. dow futures are up nearly 300

points on those positive comments of the president about china reportedly wanting to come back to the trade negotiating table. now all the major indexes are coming off their first four-week losing streaks since all the way back in may. the question is what really matters the most to the markets and your money let's find out, the founder of northman trader, always a guy we enjoy having on a program, especially when -- as we say, sven the markets have been in turmoil like this. if we were to put up a list like this, china and trade, the fed, brexit, technicals, is there one thing you could point out that would be the most important thing to u.s. equis the right now? >> well, we always look at markets through a technical lens and obviously we have incredible volatility right now for all these headlines, right i say these days, everybody has a trade plan until they get punched in the face by a tweet, right? we saw this again on friday.

now we see it with this news program. when i look at all these things, though, including the fed, if you look at the larger market structures, they keep following patterns and a path. july, we talked about a sell zone in 3,000, 3,500 markets built this large megaphone pattern and we rejected clearly from there and still in this consolidation range that we have been known the last few weeks markets are negotiating here in terms of a battle for control. >> you know, deserve is probably the wrong word i guess, sven 5:16 in the morning, i'm struggling to find a better word do the markets deserve to turn around nearly 400 or 450 points in the matter of 90 minutes this morning based on the comments from the president about china perhaps wanting to come back to the table. should trade headlines move

markets like this? >> very good question, brian look, there's a lot of emotion in these markets markets clearly sending a signal here they don't want an slerks in the trade war. they don't want a deterioration because basically what we're looking at is everybody is playing with fire here a little bit. we have 8, 9 global economies at the verge of recession or in recession. and so you're worried about a trigger that could push things into the recession territory the u.s. reacting to downside pressure in markets. we saw this in august when we had this first escalation in terms of the tariffs they will then walk back as you recall with tariff delay we immediately had a relief rally. of course on friday futures dumped again into overnight last night. so we immediately see a walk back again

this is the simplest explanations is often the best one. and we see reactions when markets drop hard, we see the walkback and obviously this is where traders are reacting very quickly. ultimately it sends the message that maybe everybody is aware that they are playing with fire and they don't want to risk a global recession >> it does appear and please correct me if i'm wrong, yeah, we are popping this morning on those headlines but the market internals and whatever sort of technical thing we're going to look at do appear to be weakening. >> they have been weakening for most of all from a trend perspective we actually broke the 2019 up trend in the last couple weeks we tried to recapture it i would assume this rally here in this counterrally is trying

to recapture we've been in a very precise consolidation phase. very much similar to what we saw last fall. last fall we had several weeks couple of months actually of back and forth if we break out of this consolidation zone to the downside, further risks obviously to the downside with volatility rising. so markets have to negotiate a lot of uncertainty here and as we see from day to day, there may be a trigger up or down. so watch very carefully the recent lows of 2820. we should break below that on a basis we can head back to the june lows in the 2700, 2750 range. >> 2820 in the s&p break and stay below that watching 2,700 sven henrik, always a pleasure northman trader. thank you, sven. >> thanks, brian. still on deck, violence gripping hong kong over the

weekend. demonstrations in their 12th week but taking a violent turn over the weekend we'll tell you what happened. and it is not just china looking to make a deal with the united states in trade today's big number, $262 billion. that is the amount of trade the united states does with the united kingdom the president hinting this weekend at the g7 a major trade deal with britain possible after they exit the eu u.s. exports about 140 billion there. they said about 122 billion here to the united states right now the uk is the seventh u.s. big trading market. more otre d n adanthis big market move right after this

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try olay regenerist with a money back guarantee. and complete your routine with the olay eye collection. brand power. helping you buy better. ♪ welcome back there it is, 5:23 p.m. many hong kong right now you're looking across the bay at hong kong island. now, things are relatively calm right now. they were relatively calm for about a week, but over the weekend, hong kong protesters turning hot once again in fact, police firing a live gunshot during protests. this is a first since the demonstrations broke out about 12 weeks ago and a gun was used. hong kong police also deploying water cannons against protesters earlier in the day authorities say that 36 people were arrested over sunday's protests and they are no longer and nowhere near being done. there is a huge march planned on

saturday as well as a general strike in hong kong planned on september 2nd. so there's no sign of a slow down in the tensions there we will continue to cover this major story from all sides as the days progress. all right, still to come, though, state side the president's order for u.s. companies to abandon china rocking wall street on friday. but should and can they heed the president's warnings does trump have the power to force companies to leave china the answer may surprise you. we have it coming up when i lost my sight, my biggest fear was losing my independence. mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind. it is already working in cities like tokyo. my dream is to help millions more people like me.

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♪ welcome or welcome back 5:26 here on this monday morning. stock futures they are flying high they indicated nearly 300 point jump for the dow at the open we had a more than 400 point u turn in futures in about the last 90 minutes after comments from president trump about receiving not one but apparently two phone calls from china's president xi about wanting to sit down and talk about trade. the market likes it. dow futures are up in commodities, it's not just equities, also oil making a u turn higher, up just under 1%. 54, 58 per barrel. could be another big money day on cnbc. we are back right after this short break.

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trust america's #1 whitening brand, crest 3d whitestrips. doprevagen is the number oneild mempharmacist-recommendeding? memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life. ♪ breaking news and a big bounceback to start your week. stock futures are pointing to a nearly 300-point jump at the open of course the dow coming off a 600-plus point drop on friday. how should you try to trade or invest around a potential relief rally? well, that's ahead let's go back to the table that's what trump says china is saying about trade and those six words having a big impact on the markets and your money right now. so could we really be closer to a trade deal we'll drill down.

and don't forget the fed factor how all of this trade uncertainty might way on jay powell and company your next guest has a theory you'll hear that and much more right here on cnbc on another very busy on "worldwide exchange". welcome or welcome back 5:31 here on the east coast of the united states and thank you for being with us here on cnbc i'm brian sullivan and happy to be back with you. breaking news, well, the wild august for stocks an your money may simply continue today. look at that, stock futures, they are soaring, now up 260 points right now on the dow. it is all on comments from president trump earlier today in france about china wanting to come back to the trade negotiating table. our eunice yoon reporting that according to china's foreign minister, they are unaware of any new calls between the united states and china remember, that happened when the

president said that they received not one but two calls from china i understand right now we do have breaking news in europe let's go to live comments or recent comments from president trump at the g7. >> presidents trump and presidents macron and the chancellor replied the new dream team of g7 is g7. >> that's a good answer. we had really great contributions from all of the different countries. i think that's true? very good contributions. >> mr. president, there is news that you got to compromise on digital taxation between france and the u.s. can you confirm that >> yeah, we're getting close they want to make a deal we'll see if we can make a deal. we're getting close. >> we have said that we have the

intention within us to find a solution by 2020 and that would be an enormous breakthrough to the benefit of everyone. >> correct. >> chancellor merkel are you making a commitment to take back isis fighters? >> we're talking about that now. we'll work something out i think we're going to work something out. >> i should say we already accepted the number of family members among primarily children we have committed ourselves the european union countries to work together to try to find a solution here and work together with the united states on this

one. but we want to find a solution together >> i think we've done a really great job. we defeated them we took over 100%, not 99, not 98 because i was criticized. i said all right, we get 98%, we're leaving. and i was very badly criticized. i said why not 100%. we'll stay we'll do 100 so we did 100% and we did a great job. and we've had very good talks. but it's not fair for the united states to have these people. we want to give them to the areas where they came from and that includes not just germany, france we have a lot from france. we have a lot from uk. we have a lot of different countries. and for the most part, all in europe >> mr. president on china, sir, do you think it's possible that talks would advance and you could reach a deal to either delay or cancel the planetary riff increases you have announced? >> i think anything is possible.

i can say we're having very meaningful talks much more than any time i think for the most part it's because we are doing very well china is a great country i consider president xi to be a great leader he is a great leader and look, they're losing millions and millions of jobs going to other countries if i were them, i would want to make a deal. but in the meantime, the united states is taking in tremendous amounts of billions and billions of dollars and frankly there's been no inflation and china is able to put cash into the system and the product can stay at the same price otherwise it wouldn't be a competitive product and they wouldn't be able to sell it and lose jobs. but they lost a lot of jobs. i think they want to see a sensible solution. i think we're in a much better

position than any time during the negotiation. that's something meaningful. i don't think you should have gotten here without having to go through the process. and maybe i'm wrong. but i think we're probably in a stronger position now to do a deal a fair deal for everybody so we're having very meaningful talks. >> is the chance lor pressuring you to do a trade deal with china? >> no. she's a brilliant woman. she understands exactly where everything is. she would like to see it worked out.

>> mr. president -- >> sorry >> we're all somehow linked together we all have every interest to come to a solution and we have been very glad if an agreement could be found between china and the united states. that is in our own vested interest. >> mr. president, but you are hosting g7 next year who will be your surprise guest? >> i don't think there will be any surprises. i'm not looking for surprises. we'll have a very successful g7. it will probably be at miami next to the international airport. sometimes you have hours and hours of driving to get to certain locations. you'll only have a five-minute drive, which is good you land in miami international airport. and so we think we're going to have a very successful one and can learn from what took place

here because i think they did a really great job, even architecturally the way the rooms were set up and designed we got some good ideas from this g7 but there won't be any surprises, no. >> i think that russia we had a talk, no vote, but we had a talk about russia my inclination is to say yes some people disagree with me, some people don't. there are people who agree with me 100%. but there are some that don't. so we did have a discussion about russia we'll see. i think it's advantageous, but other people don't necessarily agree. maybe at this time i think i could say maybe at this time without being specific we'll see what happens >> seems to set up the best. it's right next to the airport right there, meaning a few minutes away

it's a great place it's got tremendous acreage. many hundreds of acres so we can handle whatever happens. people are really liking it. buildings have 50 to 70 units. each delegation can have its own building you have the seven various delegations they can have their own buildings. and they can have buildings for the press. it's very big. great conference so we're thinking about it they love the location of the hotel and they also like the fact that it's right next to the airport for convenience. and it's miami so it's a great area we haven't found anything that can come close to competing with it, especially when you look at the location being right next to the airport. so many places so far away the drive is so long and you need helicopters and all sorts of

things this is something you be there in a matter of minutes before you land i think they will appreciate that. >> can you give us news on russia, chancellor [ speaking in foreign language ] >> in our talks here, i wanted to see talks held between the ukrainian president and the new ukrainian president and the russian president. we wish to see progress made on the agreement we already made as

we saw small progress. i think we have to try to bring this forward in the next few months to come i at any rate have every interest in a solution to this it is a big problem. and we have enough problems in the world as it is, so i think we ought to make progress on this one. >> mr. president, the g7 is about to lose its only female leader are you concerned that the world isn't doing enough to promote female leaders around the world? >> i'm still here. >> she may surprise you. she may be here a long time. i know her well. i don't know that you're right about that i don't know that you're right about that at all. >> mr. president, are you signing on to any of the gender equality initiatives and african partnership initiatives? >> we're looking into that we had some very, very good meetings, really productive.

it was something that we are looking at very seriously as a country, as an endorsement, as a country. we're looking at that very seriously. >> mr. president, did you discuss monetary policy with any of these leaders >> not too much. not too much it may come up at the end in our last meeting we'll be discussing that a little bit. it's a big thing, monetary policy, very big >> and fiscal. >> and fiscal. [ speaking in foreign language ] >> i invited the president on various occasions and you heard his answers. >> we'll be there. we'll be there very honored by the invitation and that's true. we will be there and maybe soon. i have german in my blood.

i'll be there. >> will you make a stop on the way to poland, for example >> well, i haven't thought of that it's a very soon but we'll in poland next week, i guess, and then heading back it's a little too soon we'll be there very soon in germany. thank you all very much. thank you. >> thank you >> thank you >> so that was a fairly short but wide ranging press availability from president trump and german chancellor angela merkel hitting everything from china trade to european trade to even the topic of greenland. steve sedge wick is live outside the dprks g7 summit in france. take your pick there, steve. there was a lot said in those six minutes and we're seeing stock futures move even higher on those comments. >> yeah. do you know what, that interview

with angela merkel and the president typified for me the last few days here at the g7 let's not forget there's no communique there's no official statement for the first time ever here as well and actually people have been looking for this potentially to go wrong for the president to get upset about something, but as france 24 put it, these international summits are made or broken on the base of the mood of the president and indeed his twitter stream well, his twitter stream has been pretty quiet about it and his mood has been very good as well that's perhaps a testament to mr. macron and his diplomatic skills because basically no communique means there's no official disagreement with america over trade, over tariffs, over tax, over china, over climate, over the environment, over a whole host of issues as well. they can't have an official disagreement because there's no communique our viewers will remember one year ago where just p trudeau had his communique ready at the canadian g7 and the president walked out

of course the market is focussing on the big country dispute between china and the u.s. we have gone from a situation where the president was tweeting, as all your viewers know, about orders to get american companies to pull out of their actives the in china to a situation where the president is talking about we're in a much better position now than perhaps we have ever been to do a deal and once again, you'll notice he was very, very complimentary about president xi as well so the personal relationship between the chinese president and the u.s. president still being talked about as very strong but really no communique is very interesting because in past communiques and i've been to a lot of these meetings, brians, g7s, 8s, 20s talk about the free trade and of course what they don't want this time around is to make it look like it's g6 plus one ie the u.s. president is the one versus the other g6ers as well they don't want to upset the chinese as well. we all know china is still growing around 6%.

the global economy growing around 1.9, 2% as well and all of these countries germany, italy and of course especially the united kingdom in its brexit situation want to court the chinese as well. but at the same time, they don't want to upset the u.s. president as well. we saw great between the u.s. president and boris johnson yet again this meeting as well the reason why this meeting might be seen as a success and the reason why the futures are rallying at this moment because nothing bad happened nobody got very upset so far as well again, the french word, all of this was in real very prevalent this time around as well and of course the hopes that the u.s. and china can get their trade deal back on track, that's what sent these futures of course in the opposite direction from the big declines we saw again this morning >> we'll call you the o-g. thank you very much, steve the headlines keeping you on your toes an we appreciate it, steve. as always. joining us now is ambassador

lincoln bloomfield, distinguished fellow at the stimson fill low and former assistant secretary of state joined by yjudith lee we appreciate you coming together for the sake of time given what just happened with the president. judith lee, i'llstart with you because the president making waves as he is want to over the weekend suggesting he could force u.s. companies under a 1977 statute to leave china. this is what you do for a living as you read it, does the president actually have that kind of power? >> yes actually the president has the authority under iepa the statute that was passed in 1977. that statute gives the president broad authority to do pretty much anything he or she wants to do if he or she first declares that there's a national security international emergency. this is a statute that congress passed that gives the president extraordinary authority to take

actions to address international emergencies. so, under this statute, there is quite a bit of authority for the president to do that i think the chinese government is aware of that that might have precipitated the call out to resume trade talks because i understand under this statue there certainly is the authority for the president to do what he did now, he would have to first declare that there's an international emergency, issue an executive order, so he can't do all of this by tweet, but at the same time, he was laying the predicate for taking further action. >> ambassador bloodfield, as you read it and see it and watch this trade war, trade fight, trade tussle whatever you want to call it unfold do you believe it is, quote, a national emergency that could be utilized under that statute >> well, brian, what i see is the president trying to put leverage on the other party across the table, as he is on every issue that you've

mentioned. so i think that what i see is president xi in a very delicate situation. he has this hong kong situation, which is really a crisis on his end and it's important for president trump not to make president xi look like he's crawling on his knees to the table. so i think the tone that president trump adopted today shows he recognizes president xi needs to save face if there's a quiet way for them to come to the table, maybe they can make a deal. the longer this goes on, people in the private sector know that finished goods is the easiest one. there's a lot of complicated relationships where american goods have chinese products inside of them and that raises the costs of american exports. it's very complicated. takes years to set up supply chains i think we have to be a little bit careful about how much disruption will be caused on the way to a deal. i think if they tone things down, keep it respectful, remember the president xi has serious problems on his side of

the table that have nothing to do with the united states, there's a chance that they can come together and i think that's what the markets are hoping. >> particularly hong kong, ambassador one more to you, though, do you believe that time for those nice words has already passed >> it's never too late to do the right thing. henry kissinger always said we are where we are it's very important that the u.s. and china find a way forward on economic relations and it may take time, but this is something that is important for the rest of the 21st century. >> should they leave china >> this is a period of immense uncertainty with companies doing business in or with clie that. it seems that we're lurching from threats to conciliatory phone calls. we're advising clients to wait and see if some clients have

already decided to look elsewhere mainly in asia for alternate supply chains. but at this point, it's the uncertainly that's really hurting american businesses. >> judith lee and lincoln bloomfield, appreciate it. thank you both very much >> thank you. there's the political analysis talk more about the big money impacter let's bring in the big money guy literally joiningous on the cnbc news line. guy, take your pick. the markets are soaring on these headlines. eunice yoon saying that chinese officials are unaware of any phone calls. you ever european union comments as well. what should we really be focussed on right now? >> well, be focussed on the fact that i think sthchgs u.s./china trade deal is front and center, there are other factors going on as well. listen, i can i speak intelligently as to whether or not president trump had conversation with the chinese, the chinese -- i have no idea, but i do know this and i think you know as well and your viewers know, president trump from the start has said the

stock market is a report card for his administration he is laser focussed on that and i think he's going to say and tweet what he needs to sort of assuage some of the market fears. i think with that he's very contact kal. but, brian, i said this for quite some time, this u.s./china situation started march of 2018. and i've been pretty consistent on this. president trump says we're closer now i think we continue to get further and further away from any possible deal. again, he says the chinese are in a delicate position they absolutely are. but i think as americans we tend to look that everything through that prism of being americans when a deal is ready to make it the president will make it but quite frankly if you're the chinese, i think they are much better suited to play the long game i said that for a while. although we can go back and forth on whether a deal is coming, again, i don't think there's a deal on the horizon. so what does that mean it means i think the markets

continue to have these huge swings i think volatility continues to grind higher, although probably not today. i think this market selloff is going to culminate the last two selloffs come kul ma nated with the vix up to a 30 level. i think that will happen this as well. >> a great man once taught me a stock price is literally only the future value of earnings we're down 623 on friday future is up whatever 300 plus points whatever right now. a nearly 900 point swing do the headlines as we have seen them friday versus today, 24 hours in trading terms, guy, really suggest that corporate earnings, which is how the market is supposed to be valued, are going to move like that? >> well, you know, that is a great rhetorical question. as you know, there's an h in the middle of that which i always like the short answer is no corporate earnings have been going lower. the other thing and i say this

respectfully, and i have no idea if we're going into a recession or not that's not my game i'm not an economist, quite frankly, there's nothing wrong with that. it's okay. it's a natural part of the cycle. we're also scared of it. but the market players and the market participants should allow that to happen don't try to fool mother nature. it's not nice to fool mother nature it's not nice to mess with the market as well. >> guy, i'll see you tonight on the 5:00 p.m. show should be a big one. >> later, sir. stock futures they have come down a bit we were up 300 there's some question now about did this phone call or calls with china really occur as the president suggested based on a reporting out of beijing stock futures have come down a bit still up nearly 200. it's already been a wild monday. pour yourself a big, strong cup of coffee. we have just getting started on cnbc we're back right after this.

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welcome back dow futures up 215 right now dan, you heard our conversation right now. interest rates maybe not getting the play they deserve. as rates come down, do our viewers have to be willing to pay more for every dollar of corporate earnings >> those corporate earnings are worth more that's why you should pay for for them. >> should or will pay more >> well, you are going to pay more for them because they're more valuable because interest rates are lower. again, we're looking at all things what you can invest in. this time last year had 10% yield. we were still in the tightening cycle at that point. the market is exactly flat the s&p is flat.

the nasdaq is flat after friday's decline but, interest rates are half the level that they were before. >> yeah. gus, i guess the whole question, and we're going to answer it in 60 or so second is this, will lower rates, will a fed cut if we get one in september, balance out or mitigate the economic damage from tariffs and a trade war? >> it will offset some of the damage obviously it will be good news for consumers looking to borrow and businesses looking to borrow, but we're unsure what the effects of the tariffs will be and so i think it will offset some of it but not all of damage that the tariffs will cause. >> what do you think the ultimate effects will be, gus? >> i think we'll see slower economic growth because of this and slower growth in both china and globally so i think it's going to be negative for the u.s. economy even with interest rate cuts from the fed >> dan, we going to be in a recession in 12 months

>> i don't know. the most important thing is stock selection right now. you want to find companies that have a high return on equity, strong balance sheets that generate cash, those are the companies that will take advantage of the environment we're in right now if we do go into a recession, those companies typically do really well because they can take advantage of making acquisitions at cheaper prices, redeploy capital to its most effective way. >> gus and dan, we appreciate it, guys thank you for joining us on this very business money. that's it for us dow futures up more than 200 "squawk box" begins right now. good morning, breaking news president trump says china called and wants to negotiate. i'm going to show you what he said just moments ago about the timeline for tariffs which caused the big market swings futures turned positive after the president's comments but now well off the highest hit in the last 20 minutes. live to one of the most memorable g7 meetings on record, including mixed messages on china, a trade deal with japan

proposed and a surprise appearance by iran it's monday, august 26th, 2019 "squawk box" begins right now. >> announcer: live from new york where business never sleeps this is "squawk box." good morning, everybody, welcome to "squawk box." we're live from market square. joe mentioned, we have been watching the u.s. equity futures very closely they started off overnight negative, down by over 100 points, but then as the president made comments, president trump said china called and is ready to come back to the negotiating table, we saw the futures take off in fact, right now the dow futures are indicated up by 187 points when he was speaking just moments ago with angela merkel said looked like a deal was closer than it