While ago. A flat yuan on the session. Lets have a quick look at whats going on in the United States. A whipsaw of a session. S p 500 down once again. We were higher a moment ago. Down about half a percent. Chairman powell speaking at the jackson hole symposium. The 10year, not a lot of movement. There was some movement in soybeans. We had a big drop only got this china headlines to the effect that china is retaliating for u. S. Tariffs. Publishable soybeans now about three quarters of a percent lower. Crude went down we got those headlines that exporting crude will be more expensive for exporters. We are still down about 1. 9 on wti. Lets get back to fed chairman powells speech in jackson hole. Joining us is matt. I make point to President Trumps tweets for thanking the fed for doing a big nothing and saying it is unclear who the u. S. s bigger enemy is, Jerome Powell or chairman xi. Very strange tweet. Atmagine thats a topic jackson hole people are talking about. The president s influence on members of the fed. Is becoming an issue . Matt i think that will be a topic. Everyone was used to the fact that President Trump had been tweeting about the fed almost every day complaining that Interest Rates are not lower. This rhetoric out of these most recent tweets is definitely stepping that up in a way that will be concerning for a lot of people here with the personal attacks. If you look at fed funds futures, they rallied quite a bit after jay powells speech pushing Interest Rates down. It was perceived as dovish. They are rallying harder now after the tweets from the president. Certainly Interest Rates are going down today. Vonnie we are getting another line for the president. I will respond to new china tariffs friday afternoon, this afternoon. That is quite serious. Carla was saying this is going badly. We need to pull back from this trade war. Cited tradewell uncertainties in his speech. How much is that overshadowing decisions the fed can make . Matt i think that was a strong hand in jay powells speech when he was talking about trade and the eventful three weeks since the july fomc meeting given all the trade development that happened since then. That did not incorporate the trade of elements we just saw this morning about an hour before the speech. Now these tweets from the president foreshadowing more to come after the speech. Certainly that is going to play a bigger role Going Forward and dictate the pace here. A day or two ago it was looking markets were doing better and we were talking about a 25 basis point rate cut in september and we will see where it goes. This raises the question or brings that debate back around about this question of you they go 25 or 50 in september and tee up more easing beyond that. Vonnie it is clear that fed chair powell once to give the market something today. It was not a speech that had nothing to do with Current Conditions. It was all about Current Conditions in the market and the economy. All thed about exit, different uncertainties in hong kong and china. How much are global issues feeding back into the u. S. Economy . Matt they really seem to be in the drivers seat in terms of the direction of policy. That has been the big debate here. We heard from some of the more hawkish members of the fomc pointing to the strong u. S. Economic data and 20 get those Global Developments have not really filtered through to strongly to the data yet. The doves are point get the global risks and certainly they won the battle in july with the rate cut. They are getting more ammunition and over thee now last few weeks. Certainly it seems like the winds are tilting and the direction of the doves. One and over the last few weeks. Interesting i would note is jay powell said one reason the outlook for the u. S. Data remains favorable is the fact the fed has signaled more easing this year and the effect it had on market rates. That could be interpreted as jay powell ratifying those Market Expectations for more easing Going Forward. That is important as well. Vonnie thanks to matt bosler at jackson hole. We will return to matt throughout the day. For more insight on the china headlines and President Trumps and lets bring in simon from london. Does any of this effectively change anything . Simon i think it does. I think first of all the timing of what President Trump had to say, the timing of the announcement, the timing of the way those tariffs will kick in all matter. Be quitet seemed to clear by the time they announced fresh tariffs not that none of suspected tariffs, but is just a matter of hours before the jackson hole speech. I think that was a message from china. The fact they are bringing in those tariffs in september and december. They are designed to kick it ahead of the christmas season. I think the comments from President Trump suggest he will get ready to do something more. Yes, there is a lot to digest. I think it changes to a degree the way we look at the markets, certainly have a look at the dollar. Vonnie its interesting that the tweet thread responding this afternoon is really impacting markets that were higher. Now indices are down a full 1 . Why is it gets are more threatened by what President Trump will do then what china says its going to do . Simon i think its because it suggests there is something fresh to come from the president. Whether that is going to be bringing back the tariffs he threatened thats a possibility that clearly will be an issue for Financial Markets. We see how they impacted in july and august. Also the fact that we dont know what else he might do. The fact he talked about the dollar quite specifically raises fresh issues. If hes not going to attack on strong dollar, what else is he going to do . Is he talking about intervention . A whole new aspect of the trade work we have not seen before. That is why the market is reacting negatively. The thin august market, that can carry us quite a long way. Vonnie down 6. 6 now. Hp down by. 5 . The dollar index is also lower. We are seeing the index dropped by a third. Euro primarily the beneficiary. Does it seem like currencies move often on these headlines, and yet todays headline is sending the dollar lower. Is that because of a lack of volume in the markets . Is there a real threat to the dollar here . Simon i think there is a little of both. This is a long weekend in the u. K. Have thin daily desks right now. From what we have been expecting from the president. I think this is that market that is starting to reassess whether there is the possibility, and hasnt whispered about intervention. What currency would be against . It seems extraordinary we would be talking about such a topic 20 plus years since intervention was a real tool for the Federal Reserve. We are, and it does seem to be perhaps that is what the market is asking. Is this part of the strategy that the president is suggesting . Will he be talking about the renminbi. Vonnie as you mentioned, literally a moment ago i was talking about the offshore at 708. We are now at 711. 53. A huge move. The 10year yield down 1. 53 . Simon, how does this change the narrative and President Trumps mind . He is very concerned about what markets do. He has been trying to put pressure on the Federal Reserve. He sends out one tweet about announcing it, retaliation, and markets go haywire. Are these markets trumpworthy . Simon i think markets are a reflection of investor thinking. The market is probably about right. There was a huge change coming from what happened over the course of today. Ironically, given the fact there is so much focus on what jay powell was going to say, that seems to be the least important part. We are talking about what looks like a ratcheting up of the edition ofunknown armaments is clearly a major concern. Globally we have seen slowing growth. The u. S. Numbers are mixed, but they are moving towards this aspect. We are talking about something and global growth, of course that will kick in the u. S. Markets and of course that will have a Significant Impact on the equities side of things. We are already seeing it. Vonnie i want to get some of your forecast. Dairy, thank you and we will return to in a moment. We have seen quite the move since that latest president ial thread. We were higher on the dow. We are now down. 20 . S p down 1. 3 . Nasdaq down 1. 5 . The 10year yield is at 1. 542. Offshore yuan is about to break 712. Look at that. 709. 48. Ore at this is bloomberg. Vonnie live from new york, i am vonnie quinn. This is the european close on bloomberg markets. Markets in turmoil. Lets check in with courtney donohoe. Courtney we are waiting to see what President Trump does next. He says he will respond to chinas announcement its imposing new tariffs on american goods. Beijing is slapping an additional levies on 75 billion fund u. S. Products, including soybeans, cars and oil. Billionaire david coke has died. He was an industrialist and a libertarian used his fortune to back conservative causes and candidates. He donated billions of dollars to foreign profit forprofit causes. He and his brother charles took over Coke Industries and turned ch industries. He was 79 years old. President has given rival Political Parties until tuesday to form a new coalition. The five Start Movement is now in talks with the centerleft democrats. He has the power to either appoint the next Prime Minister or call early elections. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Vonnie we will be looking at david kochs legacy during balance of power. Lets check Global Markets in the last 30 minutes when the president tweeted. We have seen a big change. Abigail never a dull day. Take a look at the major averages. Really down sharply. Today is jackson hole friday, the fed symposium. One of the most look forward to events in many years. Being completely overshadowed by a trade war and that is what is u. S. Stocks. That should heavy index down 2. 7 . Indexes going into today had been on pace for a weekly gain. Now on pace for a weekly decline. Lets break it down by looking at the intraday chart of the futures. We can see that into the trading session, futures had been slightly higher in anticipation of the fed meeting. China came out with her headline they are going to be slapping additional tariffs on 75 billion worth of u. S. Goods, including soybeans, cars and oil. That hit the futures, taking them down. Hase was some calm comments from jay powell came out. The economy is strong but they are headwinds. Then President Trump talks about he will come out this afternoon with a response to the china tariffs and we see a sharp led lower, down 1. 2 . This is true for bonds. We look at an intraday chart of the 10 f in your yield. Something similar. Bonds have been trading lower. The adverse yield in anticipation of the fed meeting. The china headlines came out. Then President Trumps tweets came out. Now down. 7 . One of theat oil, products under target by china, we see very choppy action on the headline. Down about 2. 8 . Jay powell came out. Helped the recovery. It is showing in the sector composition which had been modestly risk on or even a little neutral. Now clearly risk off. Energy on bottle. Industrial and consumer tech. Utilities and real estate responding very well corresponding to yields are down so much. We now have a truly risk off friday and a off week with stocks down. Vonnie thank you for that. Gold futures at 1535. 20. Simon,th us in london is chief strategist. Is there one move that blows every thing out of the water . One retaliation on the part of the u. S. Or china that changes the game entirely . Simon at the moment no. What we are seeing is akin to need acceleration of what was already the main game plan, the tariffs. All that does is continue to act as a drag on growth. That continues to phase into wider variety markets. Whether youre talking about oil in the norwegian krone or the Australian Dollar and its link to china with a hong kong dollar. Those are all the same. Trade. I think there is weakness in the renminbi. That brings increasing pressure on a lot of issues. The one thing i suspect that could change is entirely and what at a huge amount of volatility is if we start to see action by the president to tackle dollar strength. Interventionea of is obviously a fairly low probability of the moment. Overelse is the fed to do and above what has been done on the tariffs . We have to keep an eye on what is being said. Happensular eye on what on monday. A Holiday Market in europe. You can see a huge amount of volatility in the Asian Session and the european session as well. Vonnie the dollar index down about 25 . The yen is something people are fleeing to, trading stronger at 105. 65. Do you just throw up all your chips at a certain point or are you ready to make forecasts . Happy when weways can get the general direction right. I think there are certain things you can say in this kind of environment that will take place. Is the most obvious and you have seen that today. Equally the swiss franc. You expect again. Gold, you have seen that. In terms of where the money is going to flow, those are the logical outcomes. There are certain additional things you can talk about reasonably in this kind of market. You know when risk off comes certain currencies will be hit harder than others. In particular it seems you look at whats happening to their norwegian krone. That normally has narrow exit doors when the market genuinely get concerned. Yes, you could expect to see a significant amount of volatility and weakness emerge. The biggest uncertainty is still about the dollar and it is still really about what the president is talking about in those tweets from earlier when he was talking about the strong dollar. Until that is sorted out we are up and down a little bit. Until then i would go to safe haven stuff. Vonnie it is hard what to know what to do about emergingmarket currencies. Every time we get some kind of a headline, currencies dive for cover. We have seen that with the mexican peso right now. What can you tell us about emergingmarket currencies . Simon it depends on whether you are commoditybased, and it will naturally take a hit. No terrible surprises. The mexican peso under pressure in this environment. Otherwise, you are talking about the china complex. The thing that worries me, and i dont know how it works out but i think it is worth observing is the pressure brought to bear on the hong kong dollar. Weaken, continues to and the hong kong dollar remains with the pack. End ups to me that will causing huge problems for hong kong if the yuan continues to weaken. Vonnie Carmen Reinhart told us that and shes very adept at forecasting where things might begin. She things hong kong is a lot more serious than the market maybe is pricing in. Do you think there is a vulnerability . Are there vulnerabilities elsewhere . Simon i do think there are vulnerabilities in quite a lot of places. That has been the case for the last six months. Inhink one of the problems this terrible week for yields is a lot of information. The hong kong story does worry me. I understand why it would be a concern. You are right. Because of the yield the market has reacted not quite as strongly as it should have. We are seeing the signals coming in from the hong kong forward market. We are seeing signals from the hong kong options market. They are all saying there is a concern. Fool to betuld be a against the hkma. There are clearly pressures building up and it must come to a head at some point. Vonnie thank you for all your time today. It is much appreciated. Our thanks to simon derek. Trade will be the major focus at the g7, which is taking place this weekend in the south of france. Maria tadeo is there. Relations . China is a global trade . This is Something Else entirely . Maria it is really all about trade. There is a sense of concern here because we are seeing an escalation in the trade war between the United States and china. That story has huge repercussions all over the world. European leaders are concerned it may lead into a recession. They are concerned about the state of the Global Economy and about the obligations nuclear for the German Economy which is so exposed to china. They fear the next step in the trade war could be the european union. There are three probes into that relationship. One is to do with boeing and airbus. The other looks of the european cars. Frenchrd one into digital tech. It is a backdrop of unstable politics. European leaders concerned about the no deal brexit. They are curious about that relationship between President Trump and Boris Johnson. Earlier this week trump said the eu was not fair to the u. K. And Boris Johnson would be a great Prime Minister. Vonnie briefly, is there something from the communique that they will be trying to signal to the world . Maria thats a very good question. That mayere is so low not be a communicate by the end of the session on monday. The weatherfords delegation is spinning this the way the french delegation is spinning this is that its better that have a debate that put out a watereddown statement that might not be signed by some of the big superpowers here. Vonnie maria tadeo from the g7 in southern france. There was a big casino there. Now there will be a lot of conversation as well over the weekend. Our thanks to maria. A quick check on markets. We saw a big decline after President Trump tweeted he will be announcing retaliatory tariffs this afternoon. Major indices down more than 1 . This is bloomberg. Im all about my bed. This mattress is dangerously comfortable. When i get in, i literally say ah. Experience deeper rest with the awardwinning leesa mattress. This bed hugs my body. Im now a morning person. The leesa mattress is designed for every body. Providing strong support, pressure relief and optimized airflow to keep you cool. Hello bed of my dreams. Order online, well build it, box it and ship it to your door so you can try the leesa mattress at home. Love it, or get a full refund. And rest assured, returns are free and easy. I love my leesa. Today is gonna be great. Find out why so many people love the leesa mattress, then try it in your own home. Order now to get big savings but only for a limited time. Just go to leesa. Com today. You need this bed. Vonnie stocks finishing begin trading. It is a bank holiday in many Europe Markets on monday so we ended up with a down day. It has been down for most of the session but now we are absolutely lower. This as the g7 meets in south of france. It is medley because of the tweets this morning from President Trump, which sent stocks lower. Higher,cks have been now led lower by carmakers because china is putting tariffs on carmakers it had taken off. The idea is daimler and bmw will be hurt. Who is next . Does the u. S. Also target europe carmakers . At some point that will come back on the agenda. Applied materials outlook overnight and also chipmakers will not fare well as the trade war continues to escalate. Elsewhere, we are seeing commodities move and in the u. S. We have the s p 500 down 1. 4 . Also a steep decline on the part of stops which had been making their way toward gains for a time. They are now strongly lower. The u. S. 10 year yield, 1. 54 . The 210 trade is positive but the offshore yuan trading close to 712. Weaker by another. 4 . Soybeans down 1. 4 a bushel. Crude down 4. 6 . Both of those are off there lows. Commodities in chinas headlights. They are targeting soybeans and crude. General motors and ford are the ones reacting to the retaliation. Also President Trumps promise he will say more this afternoon. He will say more about tariffs. That, we still have jackson hole going on. Jerome powell has been speaking to his audience. We are waiting for him to make an appearance outside the Jackson Lake Lodge following his speech to central bankers. Lets get straight to jackson hole. Bosler is there as well as stephen roach. You if this ask speech will have gone down well among academics, if it will have illuminated any corner of fed thinking we did not already know about . Matt here we were in jackson hole and we thought jay powells speech was likely to be the big market mover but perhaps that was naive. Already we have President Trump weighing in. On the one hand you might think it is outdated, but on the other hand jay powell speech did set things up nice for the possibility of future additional developments on the trade front. He mentioned in his speech that even the last three weeks since the july fomc meeting has been eventful given everything that has happened with trade. That is seen as foreshadowing future easing. Things have already gotten worse on the trade front. People will be looking at his speech and what he said about trade and it will reinforce the notion that the fed is probably on a path toward more easing given the latest developments. Vonnie stephen roach, let me bring you in. I want to ask you about jackson hole but first we have to talk about this titfortat with china retaliating and the president promising headlines this afternoon. Why would he want to send markets into a tailspin . Stephen it is hard to ever figure out why the president does what he wants. Are we are seeing right now the visible manifestations of the utter failure of Trump Administration trade policies. The retaliations are not surprising and what it underscores is the fact that the u. S. Economy is still heavily dependent on exports, it accounts for about 12 of our gdp and china is our third and most rapidly growing export market. This is having a direct impact on Economic Growth prospects in the United States, whether the president understands it or wants to admit it or not. The final thing i would say is that the budget deficit, which is now exploding before our eyes, is joined at the hip with the trade deficit. Our savings rate will go lower. Vonnie i will stop you. We will go to matt bosler because he is almost in the picture with the fed president and mark carney overlooking the mountains at jackson hole. Matt, let me ask you what you think these particular Central Bank Heads have to speak about right now . Matt shirley they have a lot of surely they have a lot to talk about. No signs of anguish on jay powells face. Things are moving very quickly today with all of headlines we are experiencing. If you thought jackson hole would be more of a calm affair, it does not seem like that will be the case this weekend. At the literally looking venue where people eat and sleep and talk central banking for the weekend. They are obviously going around the back at this point. That is jay powell and mark carney having a conversation. Not all of the global central bankers that typically go where there this year. Why was there a dearth of global central bankers . Embarrassment . Att that is a good question certainly there are representatives from all of the major central banks, but not all of the top policymakers have shown up. Perhaps it would have been a good gear to get them all in a room together. You never know what everyones plans are and so on and so forth. It is good that at least they have some people here and we will be talking these things out over the course of the weekend. Vonnie again, jay powell and mark carney there together. No doubt they will have seen, or somebody will have told them about the president weighing in. Stephen roach, let me ask you this. Carmen reinhart told us she thinks hong kong is a bigger threat when markets have been pricing in. She thinks it could be a shock to the Global Economy. Are you there yet . Do you see hong kong has escalating and causing a shock Financial Markets . Stephen it has already caused Early Warning reverberations. Hong kong is a serious risk and for thehina broader Global Economy. I am a little bit hardened by the fact that the protesters seem to be martin moderating their aggressiveness in the last few days. We will have to wait and see. Are plenty inrs the world from hong kong to brexit to this ridiculous trade war between United States and china. It is very difficult for the fed, as you are showing your viewers on the screen, to thread the needle with the appropriate Monetary Policy in this environment of hyper global risk. Vonnie it was fascinating to see the central bankers dressed in dark, if not black suits. Let me bring in Damian Sassower. Mark carney, the bank of england had for now, having extended his terms and maybe ask to extended further and jay powell. If you ever have sympathy for a public official, you wouldve had sympathy for them in that conversation. The whole world is looking at them to fix the mess the world is in. Can they . Damian no. That is not the writ of Central Bank Heads to deal with some of the things that are going on. It is interesting that when the retaliatory tariffs were announced with china, the Defense Department in china was sabr probably on the u. S. , talking about arms sales to taiwan. This is all about geostrategic positioning. This is about the south china sea. Hong kong is a flashpoint for what might go wrong. We were on thek, set watching the riots. The risk is still there. If things go south in a hurry, hong kong is a huge economy. It is one of the things that have to be on everyones radar screen. Vonnie it is always worth paying attention to Carmen Reinhart and what she is looking at. Beleagueredwo most central bankers in the world meeting, for a time it might have been japan, but for now these two are dealing with governments that are a little interventionist, certainly interventionist economy wise, and when the economy goes south it is up to these two to figure out what to do about it. There is only so much Monetary Policy can do. Fomc officials come out and say this is what is happening with inflation, this is what we are seeing in the data. Bond are the long days of the long gone are the days of the data dependent. President trump is necessary. For him to get congress and the senate and everybody on board with massive infrastructure or fiscal package in the u. S. Is a bridge far gone. With brexit in the woods, it will be a challenge for the u. K. To do something similar. Fiscal stimulus is a necessary agreement, but the verdict is still out. We are definitely suspect with regards to how much rate cuts will impact the real economy. With three cuts priced in through year end, i think jay powell is better to say nothing at all than making comments about a midcycle adjustment that will rattle markets that much further. Vonnie as if markets cannot be rattled further. The nasdaq down 2 . Stephen roach, i want to come back to you. Europe, butn is in not at the g7. We have donald trump watching what is going on and tweeting how the fit is disappointing him greatly. At the same time, you have central bankers in jackson hole you have g7 ministers and heads of state in europe. Worldosely aligned is the these days . How much are the goals of one economy the same as the other economy . It used to be every economy just wanted to grow. It was that simple. Stephen it was never all that simple. Complexity has taken on a new meeting in recent years. World, a globalized although there are pressures evident in terms of deglobalization. We have never had a comprehensive, integrated global framework to manage the Global Economy. Now with countries engaged in an unfortunate race to the bottom, the lack of being able to take this multiplicity of Economic Conditions around the world by selfcentered policymakers like americas president is taking a toll on the Global Economic outlook. Youve mentioned in these last varioustes all of these reverberations and potential shops around the world, and the truth is the g7 gathers over the weekend without a coherent framework to understand how these pieces fit together. War is justna trade the most consequential of the and theing developments Trump Administrations trade policies, i will repeat the point i made at the outset, have utterly failed in managing this important relationship. To take to the u. S. That consideration under thought as we grapple with our own political decisionmaking in 2020. Vonnie i cannot underscore enough the signaling in that picture. You have mark carney and jay powell together looking for solutions in wyoming, walking together after jay powells speech. One Prime Minister, Boris Johnson, is telling everybody there will not be a quick brexit deal. The other leader, donald trump, is saying this afternoon we will escalate the fight with china. It is a strange world we are living in. How should markets be reacting to this . Should markets be taking a longterm view and saying Monetary Policy or fiscal policy, all will be well . Stephen markets look at the confluence between fundamentals and the uncertainty you can trace to policy or idiosyncratic events. Certainly the markets are now latter more weight to the than the former. Markets in this environment of uncertainty are committing to longerterm positions and risky assets being viewed with understandable trepidation. Until the policy framework stabilizes or until these idiosyncratic events start to subside, it will be a volatile and potentially treacherous marketplace. We can draw comfort from the fundamentals of low inflation and low Interest Rates, but that comfort starts to ring hollow in a period of intensified uncertainty and growing risk that we have talked about this morning. Vonnie Damian Sassower, let me come back to you. Cnh rise abovep 712. If that is not another indication of fragility and the market, i do not know what is. Damian professor roach it a great point when he is talking about the pressure president xi must be feeling from the Central Party in beijing. Ago they setrs term limits for president xi. One thing president xi has to do is to manage the u. S. And he is not doing that, he has not done a great job. Professor roach had mentioned that last week. Do point on the market action, the yuan base has exploded and is rising. 710, which was a key threshold on dollaryuan. Everything is steepening. You have a lot of Market Reaction to all of this. Vonnie matt bosler in jackson hole, did you happen to hear anything the central bankers were talking about as they walked past you . Have you seen anybody else come out of the meeting and have you managed to hear anything about the speech . Matt unfortunately they were not close enough to overhear what they were saying. Certainly what we are picking up from the reaction to the speech is it has kind of been already dwarfed by some of the trade headlines we have gotten in the tweets from President Trump in the last few minutes. Vonnie if the fed chair was nervous before going into the speech he did not need to be coming out to a tweet about him by President Trump, and misspelling his name, i might add. Thanks to our panel, stephen wyoming bloombergs matt bosler, and with the onset, Damian Sassower with bloomberg intelligence. Lets check where european stocks have settled. Perhaps it is good there was a cutoff point today because we have so much volatility in the session. The dax has ended the session down 1. 2 , thanks may lead carmakers bmw and daimler, two of the worst performers in the session. Paris down 1. 2 in the ftse 100 is down. 5 at the close. This is bloomberg. Vonnie live from new york, i am vonnie quinn. This is european close on burke markets. We are looking at the semiconductor stalls on bloomberg markets. We are looking at semiconductor stocks. Highly vulnerable to china tariff retaliation. Abigail doolittle is look at get the correction. Abigial this is pretty amazing. Sometimes real life is stranger than fiction. Earlier this morning we had china coming out with these tariffs on u. S. Goods, including agricultural goods, soybeans, autos along with oil. Ships are the poster boy for the trade war, considering the supply chain is deeply embedded in china, plus a lot of these Companies Receive revenue from china directly and that President Trump comes out with a tweet that he will have his response this afternoon. The stocks started to recover now back down sharply. Under particular pressure, amd and nvidia. Both of those companies have gaming. China a big gaming country. Nvidia revenue coming from china. They shares down 67 receive 67 of the revenue from china and are also looking to diversify away from phones. 60 16 of are their chips are related to cars. The timing of this is bad for some investors because the chips are often a leading index and investors want in or out based on what they thought. Last week, take a look at this chart in the bloomberg. Ox, lastows into the s week the biggest inflows in the year. Some investors do not anticipate this trade war spat coming back up which seems surprising. Vonnie who knows what this afternoon will bring . Why would investors piling into a sector that has done so badly . Abigial is baffling. You have to think it is fear of missing out. The chips have read on the way down, they have let on the way up. Investors do not want to miss out in case they will continue to lead. Up more than 30 on the year. There are a lot of investors that think the chip sector is bottoming out. Chips,emory within pricing is bottoming out. Chipslook at valuation on , it has a broad market message, going back to 2010. This is the pe on chips. Coming out of the recession, the pe is super low and has been trading closer to 12 and 60 and 16 over the past five to six years. That is how excited these investors were about the chips on the possibility the sector was bottoming. Back at the level it has been unable to get above over the last six or seven years. Outside of those exceptions it looks like we could come back in. This suggests we could see declines. Vonnie Abigail Doolittle. One of those days you do not want to be closing your terminal. Abigial that is true. Always on the bloomberg. Vonnie for more lets bring in mike regan. It was hilarious, because we were thinking jackson hole might bring something, there might be reaction from china, the retaliation this morning. Then i go to the board to take a look at stocks and by the time back the president is once again threatening to retaliate. Mike hilarious is one word. I can think of some others alarming, disturbing. The reality is the Market Reaction to chairman pyles speech will to chairman powells speech was they took him as being dovish. Stocks rose, the dollar weakened , there was no mention of midcycle adjustment. He acknowledged the situation had changed from the july meeting. And sayot telegraph this would be an aggressive easing campaign, but the market interpreted it as fairly dovish. The tweets from the president came and i have to say i do not think anyone in our lifetime, we have ever seen this type of behavior from a u. S. President , calling the Federal Reserve and the president of china his biggest enemies. That is a very alarming thing. Saying i Order Companies to do certain things, to look at not doing business with china. Obviously the president has no authority to order ceos to do anything. The question is will he try to put that in a policy Going Forward. It ramps up the uncertainty and his statement that he has a response to the tariffs this afternoon, it makes you wonder how well thought out can that response possibly be . It is clear he is having a tantrum. Who knows what we can expect. ,learly the risk off sentiment it is hard to imagine it turning around today. Vonnie it does express exactly what everybody is thinking, literally in jay powell statement was fitting trade policy into this framework is the new challenge. That could be the mantra for this market. Michael exactly. We thought tensions had eased. President trump had postponed the next batch of tariffs. The assumption is now he will flipflop back on that and move up the next batch of tariffs. Who knows . It is surreal does not describe the environment enough. It is beyond imagination. About a comment my colleague cap earlier this week, saying this is the type of behavior you would expect out of more markets volatile, less valuation premium. You have to wonder if the u. S. Will start trading less like the u. S. And more like emergingmarket. Vonnie mike regan, we will follow your blog throughout the afternoon. Once again, i am cohosting balance of power along with kevin cirilli. We will speak with the Atlantic Council senior fellow and be looking at the legacy of the koch. David c you do not want to miss that. Down almost 2 on the major indices as copper and soybeans and crude oil all plummet. Kevin from bloombergs in downtown washington, d. C. I am kevin cirilli. Vonnie from bloomberg World Headquarters in new york i am vonnie quinn. Welcome to bloomberg balance of power where the world of politics meets the world of business. Financial markets reversed sharply lower after President Trump latest trade threat. Here is Abigail Doolittle with details. Abigial it has been an extraordinary day. It was supposed to be about jackson hole. Instead it is about the trade war and that is dragging on the major averages. The dow, the s p, and the nasdaq all lower. The nasdaq being dragged down by the chips which have a sensitivity to china and the trade war. Down more than 2 and making this a risk off day, look at the rally for bonds. The best day for the 10 year yield an almost two weeks as investors are fleeing the riskier assets of stocks and going into haven bonds. As we break it down, it did not start off this way. If we look at