good morning it is 8:00 a.m. at apple headquarters in cupertino, californ california 11:00 a.m. on wall street and "squawk alley" is live ♪ good tuesday morning welcome to "squawk alley." i'm carl quintanilla with jon fortt and morgan brennan at the

new york stock exchange. the u.s./china trade war taking a bite out of apple, now on pace for the worst day in over a week as the white house's 15% tariff on a new batch of goods goes into effect over the weekend obviously, a big story for the markets. apple products expected to be hit this time around include the apple watch, air pods, the home pod, imax, and some beat headphones for more on where the stock may go from here, we're joined by an apple bear, pierre ferragu has a sell on the stock, a 170 target. also with us, apple bull, daniel flax, whose target is, daniel? >> carl, i can't give you a specific target, but what i can say is that while the near-term environment certainly remains sluggish with iphone and clearly there's a risk in terms of higher prices from tariffs impacting demand, we see a lot that we like over the medium term and i say that because the iphone install base is continuing to grow the company has opportunities to show additional growth with newer services like tv and

gaming when we look at the wearables market, the apple watch, even with the tariffs, we think there's a lot of innovation. and so if we pull it all together, the ecosystem remains healthy, we think apple is delivering innovation and its customers, its partners, the app developers are benefiting from being part of this, which ultimately we think will create shareholder value over the next two to three years >> is your call a tariff-related call >> not really. my call is simply that apple's main issue, and i agree with dan, it's a near-term issue the next couple of years, is that the average iphone user actually loves her phone so much that she doesn't want to change it for a more expensive and not much better phone so apple has to go through this very difficult time where its user base is growing, it's true, but they're replacing their phone less and less often. so the way apple has been managing that very well has been by being very aggressive on promotions, on pricing to encourage people to renew their

phones earlier than later. you can do that if your cost base is coming down. so price have been coming down in the last six months it has helped apple taking prices down much faster than usual. 7 to 8% faster than usual in the last six months. if prices kick in, prices are going up and there will be a squeeze. apple cannot take prices down anymore, or apple will have to suffer a lot >> pierre, i love the courage of the sell call. just like last time, when you had the sell call, the stock dipped down, but then it popped right back up. so i wonder, first of all, how much of this is a longer term issue with apple stock how much of it is, you think, this is just a little rough patch that apple is going through? and then, you've got the 5g cycle that's coming next year. eventually, people are going to start pay attention to that. maybe the services businesses do business than some people expect isn't there the risk that apple starts trading on that stuff

instead of the iphone? >> yeah, so, i think, you're framing it right five years, as dan says, the ecosystem is in place, people maybe love their phone less than they used to in the past, and the ecosystem ties are very strong so i think the business is, it isn't like a fundamental issue the real question is how is apple's right to make money evolving if you can't make as much money on your phones in the past if you have to change the way you make money, selling more watches and more services, that creates a transition and what i have visibility on today is that transition and that transition, is extremely painful for the very reasons you mentioned. we are heading we are today at a very low level of demand. very difficult to challenge that we are heading into a very weak cycle. because who is going to buy like a $1,200 iphone that is not 5g

knowing that the next one is going to be 5g that transition is going to be painful. when we have the low of the transition, and remember what i did in february of last year, then there is the possibility to look further away and see what kind of upside we can see in the stock. >> yeah, dan, to that point, the fact that 5g is a 2020 story for apple, and the fact that you are so bullish on the company, expectations seem to be pretty low for this next iphone iteration which we are expecting to happen next week. what are you thinking about it >> expectations are low, morgan. i think people are expecting there's likely to be an additional camera and a faster processor. but we think, though, that the bigger story is around the integration of the hardware, the software, and the services that ultimately is what helps to differentiate the user experience and helps the iphone stand out from the other products so, whether it's a 5g variant late next year perhaps or whatever might come down the road, ultimately that innovation is what's critical and if we look at the history of the company, we, all of us, i

think, here, remember the ipod, right? and so apple has reinvented itself so it is not a story without risks, but where we look for innovation, we're finding it areas, for example, with the watch can enable them to move into areas like health care, with the ecg, the electrocardiogram app. so if the devices and the services are adding utility to their user's lives, certainly there are more payment options that can make it affordable. we think that's important, over the medium term. >> so i know we don't have any tariffs on iphones, at least not until december, based on what's planned right now. but where you do look at where the growth is coming from in addition to services, it is watches and wearables like air pods, those are getting tri tine as of this past weekend, how do you factor that in >> it will be a hit to earnings. i think the market will look past it if it is clear that there is innovation in the new watches that come out, be it additional health care or maybe sleep functions that add utility to user's lives.

there's little doubt that it will raise cost, it will impact demand but i think for those who want to look further out, as we are doing, we see opportunity here >> if there is liability, regarding tariffs, pierre, is the balance sheet, is the put that's implied by their pace of buybacks in recent years, is that still in tact because a lot's been made of the slower pace of buybacks, some among all s&pers year on year? >> that's a good question. i think the change in behavior around the balance sheet and like the financial stability of the business relates more to what's behind the tariff situation. because the tariff situation, at the end of the day, it's going to make potentially look terrible, a very difficult time in terms of product cycle, china, that's my call. but in the long run, it's no big deal it's like, 10, 15% higher costs from china it's a new opportunity to look at arbitration costs from other countries, rethinking your global footprint in terms of

manufacturing. this is the ability to work through and for a company like apple, it doesn't present a lot of money the real issue around these tariffs is actually the impact on the macro and i think if you see apple being more careful today, that's probably because the macro is concerning them. the risk that there is a tariff war gets us into a recession is really what probably worries the management today >> we'll be looking for commentary from the company on that front next print. thanks, guys, good debate. we'll see where it goes from here, dan and pierre >> well, hurricane dorian beginning to move up the southeast coast today, following its severe destruction of the bahamas over the weekend contessa brewer has the latest from hq. contessa >> hi, there, morgan hurricane dorian was just downgraded to a category 2 storm, but it is so slow moving. and it's a powerful storm, even so moving at a mile per hour. people in the bahamas have really been enduring this for more than 24 hours with unprecedented wind, storm surge, punishing rain

public officials have asked those who need rescued to text their location through whatsapp, which is now owned by facebook they are reportedly receiving more than 2,000 rescue requests. flooding remains a challenge, roads washed out, communication, power, water lines destroyed the deepest container terminal in the region is on hard-hit grand bahama island. it's a major container hub for the eastern seaboard and sea ports are closed here in the united states, too despite the forecast shift that keeps the storm just off the coast, it has a big impact on cruise ships that are normally docking in ft. lauderdale and canaveral, jacksonville. impacted a 5 cents impact on cruise stocks. the port of charleston will close tomorrow now, remember, we saw this last year during florence and closing down the port is a daunting operation that's the file video that you're seeing there, when we were on site last year a major rail line in central florida servicing sun rail,

amtrak, csx is shut down csx headquarters are in jacksonville it's under mandatory evacuation orders the company tells me it has set up alternative work sites and it's keeping close track of this storm when it comes to real lines in georgia and the carolinas. all right. let's talk insurance the re-insurers began feeling pressured last week. renaissance and everest could have notable exposure, but with the change in forecast, those stocks have rebounded today. renaissance is up more than 4%, everest up 3.5%. we'll keep our eye on those. carl >> very comprehensive. thanks, contessa our contessa brewer. after the break, rbc takes its target on amazon up to 2600 following a deep dive into the company's one-day shipping initiative mark mahaney will be on next to talk about that. major averages, not too far from session lows everybody really watching the ten-year at 1445 we're back in a nn mu i don't know what's going on.

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amazon to 2,600. that is the latest call out of rbc, reiterating its outperform rating, out with a new note this morning on the company's one-day shipping plans the analyst behind that call, rbc's mark mahaney, joins me now. mark, good morning >> good morning, jon >> so if i'm reading this correctly, you expect one-day shipping to have a big impact, $100 to $200 worth of spend for

the average prime household. also, prime additions. "a," what's the magic of one day that you think will push people in that direction? and "b," who does that come from does that come from the drugstore that people are now running to because they need something within 36 hours? >> okay. so, yeah, look, let's step back on prime they launched this first in 2004 this is the biggest initiative since then, not in terms of price, but in terms of speed of delivery and what we've noticed in seven years of survey work of u.s. online shoppers is that an increasing percentage of people want their products next day or same day so amazon is starting to give it to them. they announced this earlier this year in april. they said it would lead to accelerating revenue growth in the june quarter it did we think it actually will continue to lead to acceleration of revenue growth, especially as it's rolled out globally over the next year or two it's that big of a catalyst, or what we call a gci growth curve

initiative and it will do it in two ways. it will boost the appeal of prime. you'll get your packages next day, not two days, three days. so we think prime adoption will increase more like 60% in the u.s., but we think prime adoption will rise and we think we'll see greater spend per prime household. people buying more frequently and probably getting more into some of those household products, consumer packaged goods products and some loose grocery products we think that's the win for amazon fundamentally and for the stock. >> so, then, where do you expect to see the bigger impact when you talk about household goods, nthat sounds to me like day-to-day needs, versus key buying periods like holiday, like now prime day, back to school which is one day going to have the bigger impact on >> jon, probably the first one, which is that the products that you and i think about buying for households that we need, you know, pretty quickly, we don't want to just get it in the mail a few days from now, a parcel a

few days from now, those products, those consumer household goods, those will be increasingly part of the amazon basket but there's also a play here, when we come into the fourth quarter this year, we're all procrastinators. the closer that we can purchase things to the actual winter holidays, you know, christmas, et cetera, the more the appeal of amazon. and it creates this bigger and bigger gap between the capabilities of amazon with its hundreds of distribution centers and the capabilities of other retailers. even those that have been selling online for a few years nobody can match the delivery capabilities of amazon i want widens the mote around the company. >> yeah, to that point, mark, just to dig into it a little bit more for years now, we've been hearing about whether amazon is going to become a fierce competitor to fedex and u.p.s. and the other delivery companies out there. and certainly, even now, you could compare amazon's footprint with those companies and it's still just a fraction of the global infrastructure that's in place.

that being said, the amount of money amazon has been spending "the wall street journal" put this together really well in a report last week, that shipping and fulfillment spend last year was nearly $62 billion versus $5.5 billion in 2010 the question for you, as amazon spends all of this money on delivery capabilities, is it an amazon for amazon story, or do you think it would apply that aws model longer term? >> i think that's the right set-up i saw that journal article and i thought it was spot-on amazon is clearly building out the capability and has been doing this for a while and will continue to do it, because this is a multi-year investment bet, to take on directly the likes of fedex and u.p.s. the difference with amazon, however, is that there's another bigger win here. what they're trying to do is incentivize retailers, vendors, manufacturers to sell on the amazon platform. they refer to this as the fly wheel impact so prime becomes more attractive, because the delivery is faster, more consumers will sign up. because more consumers are

signed up, more vendors, manufacturers, retailers will want to be on amazon, because that's where the customers are you will therefore incentivize retailers to sign up for what's called fulfillment by amazon, where you just send your inventory to amazon and they'll pick, pack, and ship it for you. so there's this fly wheel that's picking up will they take on shipping with amazon, the likes of u.p.s. and fedex. i think that's inevitable. it will happen over time but i think the bigger win is building out amazon marketplace. >> so mark, what do you do with shopify then shopify is now bigger by market cap than ebay. its argument is, hey, amazon is not going to rule the entire world. give small and medium businesses especially an option lots of different ways to reach the customer that stock has been on a tear. are you bullish on that? is it either/or here >> well, i'm going to punt on shopify. i don't directly cover it, and i think what they've been able to do is really impressive and exceptional. but the pitch that retailers are not going to be willing to sell

on amazon, look, i think retailers want to get in front of consumers where's the largest marketplace of consumers it's increasingly and obviously at amazon. and especially as you make the amazon prime offering, both the consumers and retailers, more and more compelling. so that's really the win here for amazon and for amazon shareholders. we said this was a win for fba, for swa, shipping with amazon, fulfillment by amazon, and for amazon shares. that's why we raised the price target to $2,600, using the same forward free cash flow multiple or the ebitda multiple that the company has traded at over the last several years even though it's been an outperformer this year, i think there are a few things that are underappreciated this is one. >> big call with that big investment on one-day shipping markmahaney, thank you >> thank you, jon. the first trading day of the month starting in the red with the dow down triple digits currently down about 387 points right now. here are the names dragging down

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welcome back to "squawk alley. another round of tariffs going into effect over the weekend, sending stocks plummeting. the dow briefly losing more than 300 points earlier in today's session. investors and chief executives now looking ahead to the next round, which is set to take place in mid-december. joining us now is the ceo of baby products manufacturer, evenflo, whose parent company is china-based good baby international. thanks for joining us today. when we had you on back in june, one of the points you made in terms of these potential tariffs was that evenflo is in a position to mitigate those risks where car seats are concerned, but that production for strollers is a different beast given the fact that tariffs on those types of products have been pushed back to december, how are you thinking about that now? >> well, thanks for having me, morgan first of all, on car seats, let me update that a little bit. at the time, we spoke about my

supply chain and we're working very closely with suppliers to mitigate the impact of the potential tariffs and limit the cost to increases that we see to the u.s. consumer. what's actually happened, though, is with the implementation of september 1st tariffs, it's caused us some implications now so we actually pay 15% on products that we bring in to help support our production in ohio, but yet if you bring in a full car seat, you actually don't pay a tariff on it so interestingly, now as an american company, we're disadvantaged because of the tariff situation so, we've got to work through those issues on strollers, we're still hoping to get an accommodation before the december 15th tariff goes into effect. >> so in terms of the car seats and the fact that there are components that are getting tariffed right now, what does that mean in terms of cost is that something the company absorbs or are you pushing tha out in the form of price hikes >> we're trying very hard to absorb it. we're looking at every

opportunity we had and i started at 6:30 this morning with a variety of things that we're considering we're really trying to make sure we don't pass it down to the american consumer. trying to limit it as much as possible >> you're right in the midst of it, it seems, with, you've got a factory in tijuana, one in ohio, you mentioned, and i think something like nine in china so between nafta and the unraveling of that and then the trade tensions between the u.s. and china, a lot of challenges longer term, as you're planning what to do with where things are manufactured, do you expect anything to be different in five years? >> that's a good question. we're certainly looking at alternatives everybody's talking about vietnam. certainly, we're considering that but we also think the tariffs are going to be something that over time is probably going to work themselves through. so we don't want to rush to make any changes unless we truly understand the landscape and i think working through the tariffs will be the fuirst challenge for us >> evenflo sells products on

amazon there have been a number of reports over the months that amazon has been pushing back on vendors that are looking to increase prices due to tariffs what's your experience >> well, all major retailers want to make sure they do the best they can to protect the consumers and we work with them. amazon is no different than the other partners that we have. we understand their position and respect it and doing everything we can to mitigate the impact to the american consumer. >> i believe your parent, go goodbaby international, is bade in hong kong >> that's correct. actually, shanghai, but we're traded on the hong kong stock exchange >> okay. okay so how do the tensions, if at all, happening between hong kong and mainland china affect your opportunity to operate the broader business and i guess i'm talking about your parent, which is a layer or two above you. >> we've seen absolutely no implications so far. it's business as usual, as far as the u.s. is concerned as i mentioned a few years ago, chairman song gives us the latitude to make the decisions

we need. so certainly we use components coming from our factories in china. but the hong kong china tensions have not impacted the business at all up-to-the-. >> and lastly, i want to get your take on the health of the consumer here in the u.s i mean, certainly, unemployment remains low. we've got gas prices that are low. you have mortgage rates that are low and spurring more refinancings right now what is your expectation for consumer spending here in the u.s. and how is it affecting evenflo? >> we've seen demand continue to be strong. you know, we're fortunate, we're a regulated industry, so there's a requirement that families have car seats for children so that helps us stay a little bit above any kind of consumer upset. but so far, we've seen demand be very strong. >> jon chamberlain, thank you for joining us today >> my pleasure thank you. markets in europe are going to close momentarily it's been a crazy day in parliament in the uk let's get to dom chu >> all right so, carl, what we have right now is a situation where european markets, they were under pressure, closing near their worst levels of the session, but

not as poorly as we are here in the united states, on the heels of that data showing that u.s. manufacturing activity actually contracted last month for the first time since february of 2016 still, though, like you said, the big focus today is the amidt increasing prelim uncertainty across the pond. just this past hour, uk prime minister boris johnson has lost his majority in the lower house of commons after a conservative lawmaker defected to the liberal democratic side of their particularly party johnson is threatening to call now snap elections next month if parliament moves to thwart that no-deal brexit scenario and seek another extension from the european union, to kind of continue those negotiations. now, the pound fell to below $1.20 against the u.s. dollar, earlier on that was, by the way, its lowest level since october of 2016. and that british currency is now since recovered on growing hopes that many members of parliament can deal a no-deal brexit, but it's still down 5% over the

course of the past three months. there is that growing political risk coinciding with french investigative data on the uk economy overall. the company's manufacturing recession are contracted to the fourth consecutive month in august, posting its sharpest month fall since 2012. so if you take a look at all of that in aggregate, jon, what we have is a scenario where the uk situation is driving much of that european action we'll keep an eye on that vote coming later on this afternoon as expected, jon back over to you guys. >> thank you, dom. now let's get to sue herrera for a news update. >> good morning, jon good morning, everyone here's what's happening at this hour vice president pence meeting with ireland's prime minister in dublin a bit earlier, he began the second day of his two-day visit to ireland by meeting the irish president and his wife at their official residence also in dublin the taliban defending its suicide bombing against an international compound in kabul, which killed at least 16 civilians and wounded 119 more this just hours after a u.s.

envoy had said that he and the militant group had reached a deal in principle to end america's longest war. thousands of protesters continue to gather at hong kong's ta'mar park in front of government offices, this as a citywide strike reached into its second day protesters shouted slogans, made speeches, and held anti-government banners. and for the first time, the u.s. preventative services task force is recommending doctors offer inhibitors like tamoxifen to help reduce breast cancer the drug should only be given to women over 35 with a family history of that disease or to those with previous benign breast lesions and you are up to date tha that's the news update this hour back downtown to "squawk alley." guys, back to you, jon >> all right thank you, sue and when we return, smile director club kicking off its road show this morning it's just the latest in a long list of ipos debuting this year,

sfwlu but is there a better way to the public market? our next guest thinks so investor andalti panr cofounder joe lonsdale joins us on the other side of this break stay with us fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

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the rush continues with smile direct club kicking off its road show this morning our leslie picker is in new york with more. leslie >> reporter: hey, that's right we saw the smile direct club executives leave this jpmorgan lobby where they have been

holding meetings with the sales force. they headed over to citigroup. those are the two lead underwriters for this deal those meetings with the sales team encompass getting on the same page to decide how exactly to market this deal to investors, as they embark on their road show to meet with investors and sell about $1.2 billion worth of stock now, i'm told that their plan in terms of marketing is to focus on this idea of better is better this idea that they can offer teeth alignment products at a fraction of the cost of traditional ortdontia without striving for perfection, but closing that front gap or an easy cosmetic fix that they might need the way that it works, they are given the model or impression they can take of their teeth at home, or they can do that at a smile shop or at a cvs or walgreens where they have partnerships after they take those impressions, they're connected to an orthodontist, a licensed orthodontist or dentist in their

specific state that orthodontist, of course, maintains that liability any kind of malpractice that gets involved, that is the responsibility of the orthodontist and then that orthodontist pays smile direct club for helping connect them with their customer now, i'm told the road show schedule is as following they'll head to boston tomorrow, before heading to the west coast, l.a., san francisco, later in the week before returning back to new york next week ahead of listing day and they'll hold group lunches here in new york city i'm told that they're prepared to answer questions about their total addressable market, how they see that playing out over the next few years what the barriers to entry look like for teledentistry also, they're prepared to answer questions about their smile pay financing product that they offer for people who want to finance the cost, which is about $2,000 for those teeth aligners, as well as questions about unit economics. now, this morning, the company revealed an amended s1

$1.2 billion offering size, among the biggest of the year so far. also, they're seeking about an $8 billion valuation at the midpoint of the range, which would be almost triple the size of their latest private funding round from just 11 months ago. guys >> all right, leslie thank you. and we're going to stick with upcoming ipos. our next guest is invested in several companies that are considering debuts this year, including pallen tiantir and wih he says there may be a better way to go public palantir co-founder, joe lonsda lonsdale, joins us now joe, good morning. >> good morning. >> so in recent days, we had this op-ed from sequoia's mike moritz on this topic also, i've been trading some messages with benchmark's bill gurley about this same thing they say the current system is broken there's too much money being left on the table, and it's too,

just, oblique. companies don't really get to see how this works it's like ticket scalpers. and you agree. what's better? >> you know, most of what we spend our time on out here, obviously, is the next big thing. what's going to be 100x in five years. but as you mentioned, a lot of our ipos are coming up i've only been through a few ipos myself and bill has been through a lot more bill gurley said, the banks are taking advantage of us he gave the warren buffett example, where if you're playing poker for 30 minutes and don't know who the patsy is, there's a good chance you're the patsy they make a really good point. i think we need to be careful on how we're doing ipos i think the banks are taking a little bit too much off the table here >> so what's the alternative is it the direct listing and doesn't that work better fo that are well known, that maybe don't need to raise cash as part of an ipo process? >> well, the point they made is even if you're doing a direct listing, you can still do a big

fund-raising right before the direct listing, and then do it and with prior markets these days, that's not too hard. the thing that really struck me on this whole thing is these banks are taking advantage of people, because they're giving bids at 26, maybe, to be filled, but the bid at 35 is not friends with the bank, so it doesn't get filled and so i think this direct process option seems a lot more fair when an ipo rallies by 50, 60%, that means the company got screwed, and i don't think we'll be putting up with that as much anymore in silicon valley. >> the flip side of that, joe, this idea of a company getting screwed, and i realize success is in the eye of the beholder. a company that's going public wants to be able to raise as much capital as possible, but the flip side of that is, if you see the stock rally once it goes public, you have all of those public investors and retailer investors being able to get in and have access to that potential growth as well isn't that a good thing? >> i think it's definitely a good thing for companies to go public earlier and for retail investors be able to take advantage and make a lot of money over a period of time

as investors i don't think it's a good thing for the stock to go out of the price that doesn't reflect the market price and therefore, for the insiders in the bank to take advantage of the employees of the company and people who have been billing the stock for 12 years the thing here is, we build these companies for 10 to 15 years. we're focused on building the companies, not focused on the ipos the way the people em new but the people building it should be able to get full advantage and full value >> can we have it both ways? you mentioned that a company can raise a big round right before a direct listing that's a way to have getting money, particularly in this environment. but some of fact that that private money is available is the reason why companies have been taking so long to go public in the first place so can we have an environment where companies both go public earlier and are able to raise the kind of money they need to survive and thrive as a public company? >> well, you know, right now, there's a lot of private money available, you're right. and i think that actually gives you a lot more optionalty.

but it does give you the optionalty to raise a lot and goes public in a way that reflects the market price. so i think you'll start to see us figure out how to have it both ways. and frankly, the big banks, they're coming around, they're all pitching us recently saying, we're teaching you how to do direct listings. so they get it they're saying the right things. they realize they've been taken advantage of for too long and they're not going to get away with it going forward. >> joey, i want to shift gears a little bit open gov. which is a firm you cofounded, just raised another big round of funding >> we did. >> i know you also cofounded palantir as well we've been very focused on all this jedi competition and all the controversy that's been swirling there in general, how big do you think the opportunity is for tech companies and for start-ups to work with the government and what's at stake here whether it is dod or some of the other opportunities to bring government tech into the 21st century? >> that's a great question i'm really proud of open gov.. we're working with over 2,000 governments. that's more at the municipal level. i think the biggest opportunity

is definitely on the defense side and it's kind of ironic. silicon valley was created in part to defense funding. yet so few people here are working on defense companies today. we're building new companies we have great new companies they're trying to build and it's still not very popular in silicon valley i think you should see a lot more of the best technologyists working on what i would call patriotic companies. companies working for our troops in the field >> joe, i know it's not a huge universe out there as far as vcs and investors. it's relatively tight-knit, but still, 20 getting together, called by bill gurley to talk about this issue seems a little bit unusual how unusual would you say that is and do you expect real change to come out of it during this ipo cycle? >> you know, there's a lot of history of an ecosystem where people get together and talk about the right way to do things out here but, you know, in my lifetime, no one had ever brought together people to talk about ipos and

talk about how that works. usually it's a policy question so i think it is a sign. i think he's had a couple of these get-togethers. i think he's bringing together, you know, the majority of these pre-ipo companies to talk about this issue in a few weeks. and i think you are going to see some big changes you're going to see some pushback and companies that might have only gone through this once in their lifetime, figure out what the rules are and how to push back against banks that are going through this 50 times a year and probably have a little bit of an unfair advantage in terms of the dynamics there >> all right some things happening here joe lonsdale, thank you. >> thanks. well, more on today's triple-digit sell-off coming up, with the dow down 322 points the s&p also dow21n points right now. we're back after a quick break woman: my reputation was trashed online.

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i'm scott wapner are we primed for a september stumble? more evidence today that the trade war continues to hit the u.s. economy, so what does it all mean for your money as a new trading month gets going plus, several important calls today, including a chip name getting a big bump at one firm got those details. and noted wall street watcher william cohen is here with a major warning. he's going to join us on why he says only the fed can save us. it's all at noon on the half carl, see you in about 15. >> okay, scott we'll see you in a bit >> that's what he says >> all right we'll see you in a few minutes let's get over to the cme group in the meantime and get the santelli exchange. hey, rick. >> how can i carry on after

that only the fed can save us we're really in trouble, aren't we, guys when it comes to today's numbers, obviously, the ism for august was really shocking to some, but it shouldn't be. we all know that the trade issues are having a negative effect on anything industrial manufacturing. but nonetheless, the market had a swift response, as it should last time we were under 50 was january of 2016. all right. the entire treasury curve is guns hot right now the entire treasury curve. which means, when i look up at the board, i see 144 in 2s 132 in 5s, 139 in 7s 193 in 30s should we close here these are all new cycle low closing yields, for this move that has been goinging on f inia number of years. the other news is that the dollar has given back some of its gains, but it's still up on the day. but the important thing is that the dynamic of rates doing what they're doing, domestically,

globally, and reserve currency holding so strong, you can shadow box what's really going on behind the scenes there is a huge demand for dollars. and it's not going to change and it really makes the mission of the fed nearly impossible if the fed's our only recourse, we are in trouble, and i'm not making fun of the fed. this is one of those rubik's cubes issues that needs to be solved as jim and bianca and i pointed out, another get-together. with the leading figures in central bankers has to occur something has to be done and our central bank cannot get enough leverage in any of its policy tools to address what is being exported in the form of negative rates and that's just the tip of the iceberg. corporate rates, at the beginning of the year, started out with a total accumulated amount of about $20 billion negative rates now it's over $1 trillion. this is getting to the point where it's flashing yellow real quickly now, if we look at a ten-year chart going back to

july at 2012, because that's the big bubble bottom. 138, 137, july of 2012, july of 2016 and we are getting precariously close in the mid-140s to testing it but to me, it's almost defate complete the fact that we're getting this close most likely means we're going to slice through it. and even though there may be congestion, this is not a pattern that looks very aggressive for any type of serious bounce morgan, back to you. >> yeah, and certainly one not just for the bond market to watch, but for equities and equity investors to watch as well, rick thank you. still to come, lift the tariffs and restart trade talks with china now that's the latest from chamber of commerce ceo tom dohunoe. he joins us on the other side of this break dow is down 302. stay with us we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes

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amid escalating u.s./china trade tensions, our next u.s. guest is asking for talks to return quickly in an op-ed he said the biggest mistake our leaders can do now is stoke uncertainty joining us is tom donahue. good to see you again. >> glad to be here >> you write withdraw the additional tariffs that were scheduled to go into effect today, this month and december 15th why write this when it's clear this would be a nonstarter for the white house? >> when we talked about it, when we wrote it, we were hoping that

the white house would think about all of the talk about recessions, difficulties with the fed and so on and say, you know, china has fundamental needs. the u.s. has fundamental needs, if we move these tariffs back, planned for the 1st to the end of december, we'd have a couple of months to come back to the table. china had pretty much indicated their willingness to come back to the table i think we would have been much better doing that than continuing to ratchet up of who has the biggest threat available at the time. it's all going to be paid by american companies and american consumers between now and the end of the year. we should do better. >> tom, are you saying that you think of the two sides that the u.s. is the more intransigent of the two? the more stubborn?

>> no, i think it's your turn. it's my turn it's your turn, it's my turn we hear a lot more about what people in the u.s. are talking about, people in the white house, folks in congress, members of the press than you hear about what's going on in china because you only here what they put out for our consumption. but it is clear they have serious questions about their own economy. it is clear that their banks have had challenges. it is clear their own markets, their own manufacturing are in trouble. and together i think we can look at our mutual problems and maybe make some solutions. >> tom, what would the passing of the usmca do to instill more certainty? >> it would demonstrate that congress, who i believe have enough votes to do it right now, they're going to be a little

adjustment, lighthizer and nancy pelosi are fixing a few things if we came up with a good, strong vote on that, it would give us a great step forward we'd have a new and very good agreement with the three countries. it would drive our own economy mexico and canada are now our largest trading partners we've done it all. we just need to get the congress to finish the final approval if we do it, it will be a positive deal. both parties have had people vote for it. which is good for the upcoming election i think it would rub off on what we're doing in china >> tom, it feels to me, at least for the first time that i can remember, like uncertainty is part of the strategy on the u.s. side it often is on the other side. being unpredictable, do you think that can be sustained longer term? if so, is it going to

necessitate a change in the way your members think about how they run their business? >> think about it this way, uncertainty leads to eventually no good. if you want to see what we have to do to keep people uncertain, i don't think the end result will be at all unacceptable. i would rather see us do the canada/mexico deal i would rather see us go and talk to the people in the senate, both parties who have come up with an infrastructure bill, only half of it, roads, bridges, light rail, that we might be able to move before the end of the year. if we did that kind of thing, i think everybody would have the feeling something positive is going on remember, much of this is being driven by the relationship

between 20 democrats running for office, the president and his colleagues running for office, and -- and the media picking it up and consuming it. if we took the three positive things we talked about and substituted that a little bit for all the politics we're hearing, i have a view that people would get a little more confidence and the whole issue is get the invests off their seat, put their cash back in the deal, and work hard to try and find the workers we need to carry it forward. >> tom, if you think it's in the realm of the possible even, that's news. it's a good op-ed. everybody should look at it in the "washington post" from a couple days ago. thanks for the time. >> look forward to seeing you again soon we're back in three minutes. - stand up if you are first generation college student.

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p&g, walmart, j & j the only names positive >> multiyear high for the dollar, it's industrials, energy stocks, financials leading the losses for the s&p >> still holding 2,900 let's get to the judge and the half thank you, carl. i'm scott wapner the september selloff, stocks in a sharp decline, more evidence the economy is worsening where your money will work best. it's 12 noon this is "the halftime report." stocks sliding on the first trading day of september are markets on thin ice? getting defensive, why it may be time to start shorting growth stocks. the fed under fire a scathing new op-ed saying the economy will be staring down another financia