Transcripts For CNBC Street Signs 20240714

Basic resources lead heavy losses with the sector on track for its biggest twoday fall in over three years autos shift into reverse chipmakers feel the heat with apple supplier ams sharply lower as fears rise that the new tariffs could pit the iphonemakers suite of products. And the german tenyear yield goes to an allnew low after its counterpart drops to its lowest level since 2016. Good morning. The trade truce is off President Trump blamed a lack of progress for the decision to impose a 10 levy on 3 300 billion worth of chinese goods coming this september. This sent shockwaves throughout Global Markets we saw wall street heavily in the red yesterday and that continued overnight. This is the picture for europe every single one of the majors in europe is trading heavily negative today ftse 100 down 1. 7 basic resources and some miners there dragging the oil sector as well xetra dax down 2. 3 . Again, you would imagine all of the exportsensitive sectors are impacted here. Cac 40 down 2. 5 the italian index down 2 . A lot of red on the board. Lets talk about the sectors every single sector in the stoxx 600 is trading in the red. You can see it behind me right at the bottom oil and gas down 2. 4 . Autos even more, starting with that, oautos down 3. 5 . Some of the suppliers like pirelli, down 3 we have the impending decision from the u. S. On what to do with the auto tariffs this is hanging over that industry banks, we had a slew of earnings come out in the last week. This morning Credit Agricole and rbs coming out rbs down 4 . Credit agricole down 2. 5 . Basic resources down 3. 92 arcelormittal came out with earnings yesterday today theyre down 5 at the bottom of that basket. Every single sector that is exportoriented or Interest Rate sensitive is trading in the red. Speaking of Interest Rates, lets talk about some of the priced action in fixed income. Ive been watching fixed income markets for a long time, i have never seen a move like we saw on the front end of u. S. Treasuries yesterday. Twoyear yields rallied 17 basis points after the news that the tariffs would be applied thats a huge move the curve did steepen on the back of that but not for the right reasons. Theres been huge ramifications for fixed income overnight we rallied 20 basis points since the fed meeting. So a remarkable yield there. Tenyear bund, not a surprise to anyone, new lows minus 48 basis points is the privilege you can get to own tenyear germany now tenyear gilt rallying 55 basis points and japanese yields, minus 17 basis points a lot going on in the markets overnight. Significant moves in the curren currency really interesting to see euro strengthening against the Dollar Dollar weaker against the yen. Dollar against sterling, only sterling performing more weaker than the dollar. Dollar yuan offshore and onshore, significant there thats something people will be watching closely over the weekend as we get more details about the chinese reaction to this lets look at the commodity space. Really interesting to see the reaction wti trading down around 7 at one point yesterday. Its up 1. 5 gold, still staying up around the sixyear highs, its at 1,438 an ounce lets see where the asian markets have closed now that hong kong ceased trading the shanghai comp down 1. 4 . In shenzhen, down 1. 5 the hang seng closing at 2. 37 lower. So Significant Impact on asian equities talking to reporters after the tariffs were announced, President Trump said his couhine counterpart was not moving quickly enough president xi, i think he wants to make a deal, but frankly hes not going fast enough he said he would be buying from our farmers, he didnt do that he said he would stop fentanyl from coming into our country, he didnt do that were loses thousands of people to fentanyl. This was time. Just in the last 15 minutes, Chinas Commerce Ministry said it is prepared to take countermeasures and beijing does not want to fight a trade war but is not afraid of one either. Our colleague, eunice yoon, filed this report. Reporter chinas top diplomat slammed President Trumps decision speaking at a conference in thailand, the foreign minister said the u. S. Tariffs were neither a constructive or correct way to resolve trade frictions. The comments come after President Trump said he would slap 10 tariffs on 3 300 billin of chinese goods starting september 1st. Overnight President Trump told reporters that the tax could go higher if you remember, when i did the 25 , i did it in stages. This can also be lifted ultimately in stages or it could be taken off it could be lifted in stages were starting at 10 t could be lifted up well beyond 25 . But were not looking to do that necessarily. President trump said that he felt china and specifically president xi jinping wasnt moving fast enough after being debriefed by top negotiators lighthizer and mnuchin about their talks in shanghai earlier this week. U. S. Businesses in china fear retaliation. The u. S. China Business council said their members are worried about delays in licenses and approvals and diskrcrimination n Government Procurement tenders the American Apparel and Footwear Association says it is shocked and believes u. S. Consumers will be hit harder than chinese factories chinese manufacturers expect china to be hit hard they say that a 10 tariff would be a blow to a sector thats already under strain one manufacturer said that he will likely stop selling to the u. S. Altogether. As for a trade deal its unclear if beijing will take part in the next round of trade talks set for september. The global times says the tariffs will only lower the prospects of a trade deal and beijing will hunker down for a prolonged trade war. Were joined by anders coating. Thank you for being with us. Does it matter the market was surprised by the fed now that we heard this from President Trump . I think it is a surprising thing. We had months and months of low volatility in the currency space. All of a sudden we have two events which are changing that we saw the reaction of a stronger dollar after the feds surprising the markets its moving into a riskoff environment. In my opinion it is very much all about volatility from here and that will influence the market from here what does that mean for the dollar whats interesting about the u. S. , weve been talking about the fed shifting tactics the last couple of months. Potentially embarking on an easing cycle the dollar does continue to strengthen for july, the dollar was up 2 into that easing cycle now that we have volatility, now that we have the extra tariffs, now that the trade war moved up a notch, what does this mean for the dollar is the trajectory negative Going Forwards for the dollar the surprise from the fed was that the market rightly or not right was expecting more and that didnt happen so more cuts in Interest Rates would have been negative for the dollar that didnt happen so therefore it was positive for the dollar the dollar was bought. That was the first reaction after the fed. A stronger dollar is negative for em fx, and it was strong against most currency. It was a pure dollar move after the fed. Now with higher volatility or increasing volatility we should not forget overall volatility in fx is still historically low levels. Now were picking up, which is good for the asset class but not for the carry trade. The carry trade needs normally three conditions attractive yield differentials, low volatility and liquidity now volatility goes up, these carry trades are getting questions or reduced therefore the dollar is a carry trade and it may be reduced. Mainly the emfx space will be under burden when we saw the reaction across Asset Classes to what the fed said and did, it was pronounced in the currency space. Clearly theres a huge reaction across Asset Classes to what the president announced. Do you think currencies and the dollar will see the most volatility of all these Asset Classes Going Forward . Its a hard question it is a hard question we had so many months of low volatility we are when you see the currency space overall, we are on historically low volatility levels again there were only three major periods. It was 1996, 2004, 2007, and 14. And now we are at similar levels in the past it happened almost every time that we saw a huge spike afterwards im not i dont know whether we see the same now. Now we have at least a few arguments that it could happen and we could go higher in volatility one thing that probably doesnt get enough attention is one reason why the dollar was squeezing so much is literally due to a funding shortage, because dollars were being withdrawn from the system. Were seeing the fed is ending its funding two months earlier. Do you see them providing more liquidity to that market to stop the funding issue . The problem is really about expectation of rate cuts and the dollar is the main funding currency for emerging market debt and when the price of the funding gets more expensive, it is a problem therefore the influence comes from this side on the other hand, as we already mentioned, its the carry factor at the moment we have relatively unique situation that the reserve currency, which is low risk, has the highest interest rat rates. We seldom have this situation. With this, the dollar though it is a reserve currency, its a carry currency a lot of money was flowing into the dollar the last few months so that is easy to understand because with low volatility theres no risk to hurt the dollar, but that might change with higher volatility these positions will be thought over that juicy 2 yield on u. S. Treasuries andreas, well pick up the conversation in the next segment. Moodys has warned an escalation in trade tensions will negatively impact the Global Economy and supply chains the Ratings Agency said that u. S. Consumers would pay higher prices for everyday items like electronics, clothing and toys its also pinpointed u. S. Crude, transport equipment and smu semiconductors that could face pressure from the tariffs. President trump will also make an announcement on eu u. S. Trade today. That is at 19 45 cet and also according to bloomberg the u. S. President has previously threatened to introduce tariffs on european automakers that he has said are damaging to u. S. National security so stay tuned for that announcement tonight coming up, rbs announces a larger than expected dividend but warns about the longterm profitability target more after the break at comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Olay ultra moisture body wash gives skin the nourishment it needs and keeps it there longer with lockin moisture technology. Skin is petal smooth. Because your best skin starts with olay. Welcome back rbs announced a 1. 7 billion pound dividend for the Second Quarter as it recorded its highest profit to shareholders in a decade. They posted a pretax profit that beat expectations thanks in part to the sale of its stake in a saudi bank rbs cited tough Market Conditions as it warned it is unlike likely to achieve a return on equity of 12 in 2020. Credit agricole roeported ne profit fell 15 in the Second Quarter. The bank said a weak performance in investment and corporate units kept overall profit in check. And natixis beat profit forecast force the seco and natixis beat profit forecast force the seco for the quarter. They saw outflows of 5. 6 billion euros during the most recent period because of concerns about the funds liquidity the cet 1 ratio stood at 11. 5 in june. Above the 2020 target. Allianz backed its fullyear guidance after delivering better than expected Second Quarter results. Net profit rose 13 , revenue increased more than 6 that was thanks to Property Casualty and live and Health Insurance units as well as Asset Management that Asset Management business houses pimco allia allianzs cfo said they may have to reassess investments in the current lowrate environment the Interest Rates are low. As they keep going, somehow the assets under management are going up, thats good for the customers. Maybe we need to rethink sometimes the way we look at investing into bonds in a low Interest Rate environment. As you say, were pleased with the 1. 6 trillion of assets that we have in our books that level is promising also for the following quarters in terms of Revenue Generation and profit generation from banks to central banks, the bank of england has cut growth forecasts in part because of brexit uncertainty. The central bank now expects the uk economy to grow by 1. 3 this year thats about 20 basis points lower than the 1. 5 growth it had forecast in may. It also cut its growth projections for 2020 it does see a pick up in forecasts in 2021. The forecast assumes the uk will depart from the European Union with a brexit deal governor mark carney suggested that growth could be much slower if that departure goes ahead without a deal its not as simple as saying in the event of nodeal theres one path policy could take nodeal would unusually for an economic shock be an instant shock not just to demand, which is what everybody is used to seeing, but a shock to supply. There will be supply capacity in this economy that will become uneconomic its a challenge for mark carney to do anything that will help support the pound at the moment you see that sterling, despite that weakness overnight in dollar, is still trading weaker against the u. S. Currency. Dollar there weaker against yen and obviously weaker against the euro were still here with andreas. He follows this closely. Do you subscribe to the idea that trump, by introducing tariffs on the remaining 3 300 billion worth of chinese goods is potentially keying on weakening the u. S. Dollar . This is an effort by him to weaken the dollar . Something he called for and pushed for for some time i think thats two Different Things obviously he was clear that he would prefer a lower dollar, because a lower dollar is in general a boost to the export, and it would support his idea of supporting the economy can i ask a related question then do you think what hes done overnight is potentially an effort to put more pressure on the fed . Indirectly indefinitive he caused Interest Rates to go down in the u. S. He is giving with this tariff another burden to the economy. We have globally slowing economy any way. So that puts more pressure an therefore more pressure on the fed if the economy deteriorates fur thother to do more steps. Lets talk about sterling and willem was saying its difficult for mark carney at this point citi put out a note saying if you want to see what happens to the front end of the uk, youre better off listening to Boris Johnson than mark carney thats a valid point the politicians will determine the fate of where Financial Markets are headed but all that being said, with the cable trading at around 1. 21 here, how do you play it is there more potential for d n downside on a Nodeal Brexit is it fully priced in . At the moment, theres more further potential for the down side there are few negotiate tative s that align its the brexit uncertainty. Certainly everything is on the table, no deal, a deal, so a lot of uncertainty from this side. Then we have the Economic Data deteriorating, which came in recently and globally as well, we have the global slowdown in growth. All things are negative for the currency at the moment the sterling was out of focus for quite awhile it was the Brexit Process was postponed, and the investors didnt look like it. But it came back into focus. Positioning was not very strong. And now with all the negative things, i think there is more negativity from here but as we can also see, if all of a sudden it could come out something positive an it turns around and we go the direction of a positive deal, we could snap into the other direction. Do you think putting the two together youre better off buying the option rather than having exposure to the spot currency and again that ties into what you were saying earlier. Volatility is expected to go up. Perhaps the best way to think about it is to buy an option on the currency it is certainly true. With an option you can put something on with the greater flexibility for the uncertainty. Astonishingly volatility with sterling was low, but with the moves the last few days that changed. You can see a clear discrepancy between the Maturity Dates in the volatility curve before the brexit date and after the brexit date so theres a huge gap. Volatility is still relatively cheap before the 31st of october, but then it gets expensive. Its not you get more flexibility, but you have to pay now. Theres no free lunch. Well leave it there. Thank you very much for joining us we are learning that theres no free lunch here in the uk especially when we have to travel outside. Coming up, well talk more about this Boris Johnsons house of commons has narrowed after anwales well try to lay out the math after the break. Heres the volatility index. Theres a look at it there at the Alzheimers Association walk to end alzheimers, we carry flowers that signify why we want to end the disease. And we walk so that one day, there will be a white flower for alzheimers first survivor. Join the fight at alz. Org walk. Theres brushing and theres oralb power brushing. Oralb just cleans better. Its the one inspired by dentists. With the round brush head. Oralbs gentle rounded brush head removes more plaque along the gumline. For cleaner teeth and healthier gums. Oralb. Brush like a pro. Welcome back to street signs. Im willem marx. Im joumanna bercetche. These are your headlines european stocks join the global selloff after President Trump says hell slap a new 10 tariff on 300 billion worth of chinese goods. I expected that a little bit because people dont understand quite yet about whats happened. Weve taxed china on 300 billion worth of goods and products being sold into our country, and china eats it china hilt s hits back sayig theyre prepared to take countermeasures. The economy minister saying were not afraid of a trade war. Basic resources lead heavy losses with the sector on track for its biggest twoday fall in over three years autos shift into reverse the german tenyear yield hits a tenyear low after its counterpart drops to its lowest level since 2016. Want the good news or bad news start with the good news and stick with the bad news . Uk july construction pmis better than last month bad news, its still well into contraction at 45. 3. In terms of context, the uk construction pmi 41. 3 indow doj 49. 3, that was the steepest contraction since april of 20009. Doesnt help the growth map backdrop the bank of england yesterday downgrading their forecast for Second Quarter growth. Looks like its stagnating numbers like this support that view a lot of shortterm volatility in the data. Lets talk about whats happening more broadly speaking in european markets. The uk is trading on the back foot, but the catalyst is not the pmi construction data, the catalyst is the developments in International Markets after the u. S. President announcing they look to impose tariffs on an extra 3 300 billion worth of chinese goods. That rocked markets in the u. S. And in asia. European markets are trading in the red. Xetra dax, the german index and the french index are leading the underperformers today. A lot of exportsensitive sectors exposed in those baskets. Here im talking about autos, basic resources, the minors, in addition to other companies on the tech and supply chain of things we have many of the Tech Semiconductor names also trading deeply in the red. Lets talk about Foreign Exchange as well yesterday we finally saw a bit of a dip in the strength on the u. S. Dollar. And were seeing euro trading more firmly against the greenback. Were up at around 111 remarkable stability in that currency pair if you think about it weve had so many events, we had the ecb, the fed, now the developments overnight in tariffs, and euro is pretty much just 40, 50 bips from where it was going into the ecb meeting last week. Cable also in focus. We have it trading slightly on the back foot, 1. 2130. A safe haven, a bid for yen and swiss franc overnight. We talked about the developments on the tariff side of things, but we have nonfarm payrolls coming up today watch out for that all of the three makers are seen opening up in the red. Dow, 96 points weaker. Nasdaq 64 points weaker. All three traded in the red yesterday after the news came out. Lets talk about the uk and going back to this side of thing. Boris johnsons conservative led majority has shrunk after this election in wales. This is a small constituency in the center of wales, but its potentially having a big impact on the parliamentary mathematics. A conservative mp who was representing that part of the world was recalled by tens of thousands of voters inside that constituency because he had submitted false expenses claims, and because of that outside of the usual general election cycle we ended up with the byelection in the uk. In that election, the liberal democrats, a small Opposition Party here, they ended up taking a victory. They now have 13 seats inside the Westminster Parliament still a small number but significant when you add up the tally of all these opposition parties on this side of the screen to explain where the threat lies for Boris Johnsons administration that number, 318 people who might be prepared both to vote a noconfidence motion against Boris Johnson but also try to thwart some of his moves on brexit on this side of the board, we have the conservative led majority its at 321. I want to give an asterisk to this number, 311, theres 310 members with a seat in the party, but one man was a conservative mp, he was struck off the conservative caucus because of some criminal charges against him that he denies we have ten members of the dup voting typically alongside the conservatives as part of an agreement they struck with theresa may after the last general election if that man is excluded from parliament, if he is found guilty of sexual assault, again, charges he denies, the challenge will be that tiny majority that Boris Johnson enjoys in parliament will shrink even more it will take just one member of his own party to vote against the government on anything that you can think of to make his life incredibly tough. Lets bring in a different angle on this. Chris whitehouse, brexit adviser from the whitehouse consulting joins us on the show the government has a working majority of one. That puts the back benchers in a powerful position. One person in particular, philip hammond, he has been vocal to his opposition of a Nodeal Brexit doesnt this make Boris Johnsons life more difficult in terms of pushing that through . Absolutely. It leaves his ability to govern, to control parliaments decisions hanging on a knife edge but then for some considerable time in the British Parliament that has been the case, that the parties are not splitting along party lines alone, its dividing on the issue of brexit, making things much more complex leading up to the situation we find ourselves in in the uk, theresa may had a chance to seek a popular mandate back in 2017 she essentially went for general election, she lost her conservative majority. Thats a reason people would acknowledge that we find ourselves with these complicated numbers. If Boris Johnson decided he didnt like the math, he would like to go for a general election, is there anything we can extrapolate from this byelection result as to what happens in a general election . Not to see what would happen in a general election per se, because it would all depend on the timing if the tories go for a general elections before they deliver brexit, they are toast that is one of the messages from this byelection that the conservative vote, though it held up surprisingly well given that they fielded a convicted criminal who had admitted his guilt as their candidate, it held up remarkably well. But it was split by the brexit party. If you look at the latest polling, theres a spike since Boris Johnson became prime minister, and brexit votes may be shifting towards the conservative party there is a boris bounce because people believe he will deliver brexit if he doesnt deliver brexit, those numbers are off. Those are not coming at the expense of the opposition. They are coming from the party that performed so well in the may parliamentary elections for europe, if you look at the behavior of some of the opposition parties in the byelection, do you think it would be a harbinger of what will happen in the general election that some minority parties step back, didnt field candidates, and allow others to field a candidate unopposed in terms of the remain position on brexit could you conceive that happening again in the general election absolutely. I think british politics will be very complicated in the future historically split down tribal lines. Your family always voted labor, your family always voted conserco conservativ conservative, but now its always changed in your expert opinion, is a Nodeal Brexit going to happen no. I dont believe it will happen its in nobodys interest that it should. First of all, many things have already been agreed, even outside the withdrawal agreement, freight will carry on the planes will keep on flying your also needs that 39 billion pound divorce settlement, thats crucial to their finances. Yesterday mark carney essentially publicly disagreed with gary cohen, a high profile former executive adviser to President Trump on the economic side of things and said hes wrong. The idea that Nodeal Brexit is preferable to continued uncertainty about brexit is flat wrong. Who do you think is right . Carney or cohen . I know the uncertainty is crippling many, many businesses. I would like to see a decision one way or another personally i voted for brexit. But actually now i just crave a decision well leave it there. Thank you for joining us, chris. Eu finance ministers will vote on europes nomination to the imf later this morning thats according to cnbc sources. Europe has so far failed to agree on a single candidate to replace Christine Lagarde at the fund we have the list of contenders there. Among them is the foreign president of the european group, whats of names in the mix silvia, give us a sense on what happens from here . Europe then selects their leading candidate, walk us through the process. At the moment we have the European Finance ministers voting on their own nominee to replace Christine Lagarde at the imf. Ultimately the decision is made by the imf board there are more than 180 members in the imf so other countries could put forward a name as well until the nominations close, which is september 6th. Until then we could see other names being put forward. But the europeans have always led the imf and theyre keen on keeping that tradition the brits are not yet noneuropean, and theresa may and her government made a promise they would not interfere in european nomination processes after those european parliamentary elections that she didnt want to see british candidates stand in. I wonder has the uk put forward a candidate . Are they likely to who might it be . If theyre not going to, does that matter to how they end up voting yesterday there were rumors that the uk was preparing to put forward a name thats why the official nominations for Europe Countries to put forward a name ended only at 7 00 p. M. Yesterday evening and what happened was that the uk in the end did not put forward a candidate. So we have at the moment these four names, none of them are from the uk. We have to bear in mind thatth vote is conducted by qualified majority in that context the uk has a lot of voting power. I checked the rules, the uk in terms of voting weight is the third most important country in these discussions. Which ever candidate gets put forward by europe potentially would need the backing of the uk the uk could have this power to overcome the gridlock or abstain from voting. All right it will be an exciting month for the imf developments thank you very much for breaking it down. Lets take a quick look at how markets are faring after that horrible session for wall street overnight we have the three indices looking to open up in the red. Dow seen down about 70 points. Nasdaq around 55 in the last half hour, so we heard from china, they said that they are not afraid of a trade war and there will be countermeasures imposed from their side the narrative is really deteriorating between the two sides over the last seven days we also have manufacturnfp numbg out in a few hours coming up, well go over to washington where the trade war is ratcheting up president xi, who is somebody i like a lot, he wants to make a deal but frankly hes not going fast enough. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. The former australian captain, steve smith, marked his return to test cricket with a superb 144 to help rescue his team on day one of the first ashes test against england up in Birmingham Adam reid is here to walk us through yesterdays action hes not a fan among english fans, is he . Thats right. The ashes do not mind a pavilla, but right now steve smith answered critics that were maybe thinking he was up to the task considering he was out of test match cricket for over a year after being stripped of the captaincy and being complicit in the ball tampering scandal that rocked the cricketing world over a year ago he answered those cettic icrita remarkable inning. 172 is when he arrived at the crease to a chorus of boos when australia were eight wickets down, he was joined by pete siddle. Steve smith took it upon himself to rebuild the australian innings and got them to a total of 284 all out smith with a remarkable 144. It meant quite a lot to him, as you can see there. An emotional knock a draining knock as it was he lost his wicket he was the last man to go. He raced straight off the pitch, and england had a couple of nervy overs at the end of play now, james anderson, it will be interesting to see where he is on the balcony today he had a scan on a calf strain he can take part in the second innings . He apologized to the rest of the bowling unit for letting them down after only bowling 4 overs yesterday. But this is the ashes. This is one of the greatest contests in cricket. Its only been day one, already so much has happened is it very clearly a bowlers wicket there at the moment you could say its hard to tell. They went into the first days play yesterday, tim payne decided they won the toss and he had a bat on it. It looked like it was a batters wicket steward broad was getting some unbelievable pace out of that pitch, something we had not seen him do for quite some time whether or not the top orders can perform as you would expect them to do is the question yes, it might be a batters wicket but as the top orders have shown, thats not always the case thanks for that. South korea has summoned japans ambassador in protest at tokyos decision to remove seoul from a favored trade list. Japans interior minister said the decision had been based on National Security concerns but a south korean National Security adviser had described seouls removal from the trade list as an act of public humiliation. Relations between the two countries have been strained recently over a compensation dispute that relates to wartime forced labor and the other side of the dmz, north korea has carried out its third missile test in eight days experts say this represents an effort to strengthen pyongyangs military capabilities and to put pressure on the u. S. Ahead of more possible talks. President trump told reporters hes not concerned about the latest developments and said the testing of shortrange ballistics do not violate his agreement with kim jongun. In addition to everything else, we may have geopolitics to worry about. If i told you that the u. S. Were looking to apply extra tariffs on chinese goods which markets would you think would be the most impacted . Would you say european no but thats the correct answer. U. S. Indices were down 1 overnight. Chinese indices down 2 . German index down 2. 5 this tells you how exposed europe is to these trade war discussions. And the fact that the rhetoric has deteriorated, theres a lot of concern from european investors that the next target may be europe and european exports. One of the main sectors were looking at is the auto sector today in europe. You can see every single one of the indices is trading in the red. I mentioned the auto sector. Were still awaiting a decision on what the u. S. Will do with respect to auto tariffs. That was pushed back to november its the worst performing basket to date in europe. Autos down 3. 6 . A lot of suppliers are getting hit here some of them down 4 prg , despie the better earnings weve seen out of a handful of them the market is very much focused on the macro narrative today banks coming under pressure, down 3 . The story here is less about the trade war, more about the low Interest Rate environment. We had a multiple number of Central Bank Meetings in the last week, ecb, bank of england, the fed, all pointing to somewhat lower Interest Rate environments, apart from carney guiding the rate hikes there we are in a low Interest Rate environment and its showing up in these banks earnings we heard from Credit Agricole today and rbs. Basic resources down 4. 5 . No surprise the linkages to china are strong arcelormittal down 5 . Chemicals also exposed to the trade war. Construction material, other names there exposed as well. Any single sector that has exposure to china is impacted. Also one in particular i want to draw your attention to, technology down 3. 5 . Some smuemiconductors in europe today also coming under pressure one were focused on is ams. They are less liquid than others, but that stock down 10 , namely because they make the chip for apple and apple has a lot of exposure to the china market via the smartphones. That is the picture for sectors. I want to take you to whats happening in fixed income. We saw gigantic moves on the front end of u. S. Yields yesterday. Twoyear yields rallied 17 basis points after the news came out that the u. S. Were looking to impose extra tariffs on china. Quite a remarkable move if you think about it, put in the context of what happened to yields the day before after the fed moved yields up 3 basis points big rally for fixed income overnight. We have the tenyear note trading at 1. 85. We were trading 20 basis points higher going into the fed meeting. Big moves there. Tenyear bund, new record lows minus 49 basis points. Almost minus 50 basis points getting to psychologically low levels here. Tenyear gilt at 55 positive and japan seeing a floiight to quality. President trump has blamed lack of information from the talks to increase tariffs 10 . Trump announced his intention on twitter and then followed up the comments at a rally in ohio. Tracie potts has more on this. Whats been the reaction in terms of the political arena there in the United States well, the reaction in the United States is whether or not this is going to cost consumers more the president at that rally that you mentioned in ohio last night said that it will not. That consumers will not see the cost of this experts are not so sure about this if we charge china more to get their goods, we expect theyll charge companies more to purchase them, and that cost may be passed on to consumers. We already have a 25 tariff in place, and this is 10 on top of that this affects phones, all types of electronics, home appliances, auto parts, cloething, Baby Products President Trump says the reason for this is that chinas not sticking to their deal theyre not buying goods from our farmers as they promised certainly markets are royaild by those comments. All three makers right now in the red thank you for watching Worldwide Exchange is coming up next. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. President trump takes the trade war up a notch threatening a new 10 tariff on 300 billion more in chinese made goods. China responding to the new threat saying its not afraid of fighting a trade war and threatening new countermeasures. Its 5 00 a. M. On friday, august 2nd Worldwide Exchange begins right now. Afternoon, good evening and welcome from wherever in the world you may be watching. Happy friday, i guess. Im Brian Sullivan its going t