The moves weve seen markets everywhere were rattled by this news look at the treasury market. The tepyenyear went all the w down to 1. 89 . This morning the yield is lower, 1. 847 this is happening as you look at yields rolling back to levels we have not seen since november of 2016 the 30year is yielding 2. 377 the twoyear is at 1. 70 the five year at 1. 648 overnight in asia, stock theres took it hard you will see that the nikkei was down 2. 1 . The hang sens off by 2. 35 the shanghai was down by 1. 4 . In europe this morning, there are red arrows there as well with significant losses. The cac is down by 2. 75 the dax is off by 2. 6 the ftse off by 1. 9 so around the world all of this, people are watching closely to see what this means for the economy. Maybe no better market to see that in than the move in crude oil prices yesterday wti was off by more than 4. A decline of 7. 9 . Thats the worst single day performance since february of 2015 concerns about what this all will mean for the Global Economy. This morning wti rebounding a bit. Up 2 . It said slapped in the teleprompter slapped you slap a tariff you are used to slapping it on the schiffhips so i can refinance my mortgage i can fill my tank cheaper and the stock market is down. My comcast anything you want to buy as a consumer will be more expensive. Lets show you what happened yesterday exactly. Schumer is happy. You should be happy. I know schumer is happy the tweets that sparked the selloff. The president said nergs thougo thought they had a deal with china three months ago he said china had not followed through on promises to buy u. S. Agricultural products and stop the sale of fentanyl to the United States. He said during trade talks the u. S. Would put a small additional tariff of 10 on the remaining 3 300 billion of good and products coming from china into our country the president spoke about his tariffs threat at a rally last night in ohio. Weve been losing hundreds of billions of dollars a year to china. It has to stop they understand that president xi is a good man hes a friend of mine. He understands it. Until such time as there is a deal, we will be taxing the hell out of china thats all there is. With friends like these, right . Earlier we showed you the reaction in blue chip stocks retail names were the hardest hit. Check out some of the names that you need to watch including best buy. It fell 10 on the tariff news, office depot, kohls as well breaking overnight we want to show you and get over to china china did respond to President Trumps new tariff threat. Eunice yoon has more on that thank you very much here in china people are using a popular chinese saying to explain President Trumps decision they say that President Trump changes his mind faster than flipping pages on a book so chinese officials not as generous Chinas Commerce Ministry said that the move was a serious violation of the consensus at the g20. The countrys top diplomat called it a move that was neither constructive nor correct. And the foreign Ministry Said that beijing would be forced to take countermeasures its that last point that has been really worrying a lot of american businesses here in china. The u. S. China Business council said their members are most concerned about increase regulatory scrutiny, delays in licenses and approvals and discrimination in Government Procurement tenders. Retailers say that American Consumers will be hit hard but chinese manufacturers are wor worried about their bottom line. System of them say the 10 tariff, even though its not as bad as what could happen with 25 , it is still a blow to their business one in particular that makes goods for Christmas Gifts for American Consumers said theyre thinking theyll have to pull out of the u. S. Market altogether in terms of the trade deal itself, theres a lot of reports in the stayed media, particularly the global times, which said at this point the new tariffs would only lower the prospects of a trade deal and that beijing will hunker down instead for a prolonged trade war. One more point id make, i spoke with one academic who closely watches the trade talks on the chinese side, he said that what hes most worried about is the chinese negotiating team Wont Take Part in this september meeting that is supposed to happen in the u. S. , between the u. S. And china on the trade deal if these tariffs go through. Eunice, was this a situation reading it from the sidelines, it looked like there was no progress made in the talks, the president President Trump hinted that, look, theyll wait until the election an see what happens i guess maybe this is inevitable if you are looking at a situation where things were freezing up any way. Well, i mean, what is interesting here is that theres been a lot of talk about how beijing is probably going to wait things out at this point. That there wasnt a whole lot of progress made. That experts say china wasnt going to make dramatic changes to its economy and the way it runs at the end of the day, you know, in state media today there were stories will pow americabout hon consumers will be hurt the worst. Beijing is watching this so theres a sense beijing has more time on its side and would be better off to wait things out. Well talk about it quite a bit. Well have different guests on there will be fred kemp is coming on. He says that he thinks its sort of the opposite view. The u. S. Can fair this better than china if you are going to wait, its still a year and a half away try this on for size, this 10 on 300 billion see how that feels hes trying to make it not an option to weight for now more on the president s tariff announcement and chinas response, lets bring in Leland Miller of chinas beige book international. The president said the deal they almost came to, there were 30 things they didnt do. They also said they would start buying grain immediately havent bought any he also got a promise for fentanyl, that president xi would do something for fentanyl. President trump says theres been no progress in that area. Its still flooding in and people are dying is it possible that all along weve seen this for quite awhile, youre a china expert, theyll nod and say, yeah, well do these things when they have no intention perhaps of doing any of these things and theyre on a mission to get where they want to get by 2025, and by hook or crook theyll get there is that whats happening here . Look, the chinese would love nothing more than to talk and do nothing. I think theres another dynamic at play. If you have a timeline not rushed, so the chinese dont see no elections, president xi is fine nothing coming up you dont have politics on the chinese side, but you also dont have a deadline to end talks they didnt think there was a new tariff deadline hitting, so youre about to take a multimonth hiatus off from the talks because of the chinese holiday in october so they were never going to do anything in september or october any ways but of how politically sensitive that holiday is. So the chinese looked at this and said were not getting into the hard negotiations, even if there is a deal, until november or december. Why are we talking about the text right now lets go some ag buys to buy off the president , get some concessions on huawei and depending on what happens so youre saying he saw that move for what it was and said okay, take another 10 on another 300 billion . I think the chinese didnt play the game well instead of having some sort of pretend move, the chinese sat down and they didnt want to talk about anything except agricultural buys and huawei theres no acknowledgement of going back to the old text lighthizer i think returned from the meetings and said this is propaganda we looked at the pictures of them all standing together, and it basically looked like all of them thinking, okay, how will i go back and report this . Dont you think that you will play the long game against china, you will lose maybe we have much more threshold for pain is the thing. Thats the thing. I think their economy can get hurt more than ours, but in general theyre ready to play the long game more we definitely have shortterm considerations over here no question thats been the problem from the beginning. Theres a new Deputy Sheriff are in town, his name is the fed the fed by Jerome Powells own explicit words has back stopped President Trumps trade agenda you could argue this is a good thing or a bad thing, but hes told the president if you make things bad enough well step in and back you Going Forward so this is completely changed the president s trajectory in terms of how much brinksmanship he can do. You dont think this is a coincidence that this happened after chairman powell not at all. I think if there was a 50 basis point hike, he would have delayed this more. Really . Yeah. I dont understand that these guys came back and told him i think he got p. O. d when it was after 11 30 yesterday it seems like it was impulsive. They met, lighthizer and mnuchin, i think they delivered the tweet was uncharacteristically muted in terms of what he was saying mnuchin wanted to say we need to alert the chinese were doing this trump said no well just come out and do it. The olive branch was there he may not put these on if he if china comes around seems like he laid out a path for china to avoid this. Start buying some of these agricultural goods, do something on fentanyl, then we can save face the falks wetalks were not constructive and the fed did not listen to the president. When theed if markets reacted t fed announcement, the president was happy to lay it on, lets get a bigger market hit and ill get my 50 basis points cut in september. You have the beijing view which is just let this roll through the election and trump also seems to think that he should let this roll through the election who is right i think why do they both think the same thing its a very strange situation. It is its different from a few months ago. The chinese economy has strengthened since the end of 2018 2018 it was a mess they spent a lot of time, effort and resources to build it up what President Trump is looking at now is hes looking at the democratic field hes saying to himself if im going against sanders or warren or one of these protectionists, i have to be the protectionist on that stage. I cant get outflanked hes trying to position himself in a way where he has flexibility on a deal if joe biden is the candidate we had people come here and say if this deal happens after the election and trump is still in office, its worse for china. Is that right or wrong i think if this thing is stretched down the road, the president doesnt need the ag buys the need for the president to demand big purchases before an election goes away theres probably a need for more substance. Structural reform wasnt on the table now or before. It wont be on the table in the future this goes to the question what do they want from a trade deal if the president is happy with getting agricultural purchases, a push back against the trade deficit, in the shortterm he can get himself a deal if he thinks hes changing chinese behave yr ior on s. O. E. , thats not going to happen thank you coming up, well get you ready for todays jobs report. You thought the news was over for this week . Its not well tell you what the jobs report could mean and how it could complicate the feds moves for the rest of the year. And coming up well talk to former white house chief strategist steve bannon. Thats coming up at 8 00 a. M. Eastern time as we head to break, a look at the premart kket winners and los in the dow chevron is leading the way along with exxonmobil, rebounding from yesterdays losses were changing whats possible every single day. , and if you run a business, that means a lot. We create Financing Options for your customers. 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A new round of tariffs on china sent markets tumbling, and todays jobs number could further complicate the feds plans for Interest Rates joining us is Jim Osullivan and matt toms. Matt, i want to start with you, your assessment of where the market stands, where valuations stand. Do you think the market was correct in its assessment of valuations on wednesday before we heard from the trump tweets, before we heard from Jerome Powell do you think the markets assessment is correct today . More correct before the tweets we think the fed will do whats necessary. The market was bouncing become ahead of those tweets, its now overreacting to trade rhetoric that will stoke from time to time and fall away we dont think that will get overly heated. We think this is a overreaction to trade fears and a buying opportunity. You think its an overreaction because 10 tariffs are not a big deal for the u. S. Economy or the Global Economy or those 10 tariffs never happen they may happen its more likely they dont. The dominant strategy by the u. S. Administration is to elongate this battle we dont think a victory is needed ahead of the election better to have an enemy that you can poke atascaderan tit time a. Most people thought President Trump would like to see a victory on this sooner rather than later, so things dont rise up and rattle markets and the economy between now and his election you dont think thats the case . We dont. Its easy to stand back and say you dont like how were fighting the battle, but who else will do it. Its a strong strategy lets talk about the fed and the position jay powell and company are in now they told us they would be watching to see what happened with the trade talks they would be watching to make sure things didnt get worse if they get worse, are they obligated to step in and cut rates once more . Theres no question that yesterdays news increases the likelihood theyll be going ban in september this is in context of whats happening on the numbers front the fed is easing, but not dramatically easing. They view those trade tensions as a drag on the economy the economy is clearly slowing on the other side the prod econobroa economy has held up reasonably well every number that comes in, is it showing the broad economy weakening a bit or not with trade tensions intensifying, the likelihood of them going in september is even more the next piece of data is the jobs report in about two hours time what number do you expect . What would be a number that changes the equation of course monthly numbers are volatile well get another employment report in Early September before the next meeting last month employment was much stronger than expected we had 224,000 on payrolls i dont think the trend is that strong there is some slowing here if anything were due for a belowtrend number. We have 140, its a bit below consensus. The one thing to watch for, we could start to get hiring for the 2020 census, which could be temporary hiring and boost the number people should look at that numb number matt, the stocks under the most remember sure yesterday were energy stocks, concerns about the broader economy there an trade sensitive stocks, smuktesmuk e smu smu semiconductors and retail. Things that are tied to commercial real estate, things like housing related, they have a tailwind from this low rate structure and the pinch lower i rates to offset the volatility but the Pressure Points and selloffs, you have retailers down more than 10 Oil Prices Dropping dramatically you wouldnt be willing to step into those areas even though weve seen the biggest pullbacks there . I think there will be opportunities. This has a bit more to run it will create opportunities were not courageous enough to go to that front end, any weaker in stronger assets is a good opportunity. Thank you both. Coming up, activists in the cloud, well break down the latest investment from carl icahn and show you how the stock is reacting. Thats next. Time for the executive edge. And weve got a stock mover. We dont have stock movers to tell you about toyota, the automaker reporting profit rose 4 in the First Quarter. Sales improved but they did fall in north America Toyota lowering its forecast blaming Unfavorable Exchange rates. We have activist news to tell you about carl icahn disclosed a 12 stake in cloudera. Cloudera was founded by engineers from google, facebook and oracle and yahoo but they have struggled to shift to the cloud. They are 10 on the news, but they have come off the highs they are less than half of what they were back in march. This is still the executive edge were still there i thought i got to do the executive edge no, you get to i get to do one part . Yes i dont get to do this part this is my good luck. Comcast announcing a new universal theme park in orlando, florida its called epic universe its the largest investment comcast has made in the theme park business. It will be located on a 750 acre plot of land its across the street from where the existing campus is to find that much land that close to your existing park is kind of phenomenal what do we know . We know how many workers, but what is epic universe . What does that mean . Its epic going to be an empic park do we know anything . You looking it up, sorkin . I dont know what theyve made public. Ive seen is it super heroes . I dont know. I dont know what has im just conjecturing its really cool. Its literally across the street thats all you can tell me . 750 ache seniores is really cool to find that in orlando, right next to your existing park, thats amazing its literally across the street from the rest of it. Maybe a water park. They have a water park already. What is it that they dont have did you find anything, sorkin . You know dinosaurs or something . I had one conversation with someone. Thats why im being scircumsp t circumspect. Its much more about the space and the land wait a second isnt Jurassic Park our thing . It is is it possible theres a Jurassic Park ride that exists already is it possible weve done it . There is one is it possible weve done it with the dna that we have actual dinosaurs . I wouldnt let that out that would be embarg oembargoed wouldnt it . Do you think were trying it for real i dont think so. Why its pretty cool. Ill tell you during the commercial break. Coming up, well tell you about a couple of big earnings movers and President Trumps tariff news wreaking havoc on Retail Stocks yesterday well tell you which retailers will be hardest hit this hour. As we go to break, a look at the s p 500 winners and losers through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Why go with anybody else . We know their rates are good, we know that theyre always going to take care of us. It was an instant savings and i should have changed a long time ago. Were the tenneys and were usaa members for life. Call usaa to start saving on insurance today. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning youre waking up to a busy friday Global Markets reacting to the news that President Trump will slap another 10 tariff on the remaining 3 300 billion of chinese goods not subject to taxes. Well get the monthly jobs report in two hours time that could put additional pressure on the fed to cut rates again in september if it comes in weak. Or if it comes in strong, it could raise questions about why theyllen c ee ebe cutting rate. You can see Global Markets are under pressure hang seng down by 2. 3 the cac in france down by 2. 5 look at the yield on germanys 30year bund it just turned negative. The yield on the u. S. Tenyear bond hitting its lowest level since november of 2016 it was down 13 basis points yesterday. This morning trading at 1. 843 , even further pressuring the yield. U. S. Equity futures at this hour are showing some additional declines down by 42 points. S p futures down by 10 the nasdaq off by 45 stocks to watch, look at etsy shares fell as much as 7. 5 late yesterday but the stock pared some of those losses back. They reported an earnings beat but revenue fell short of expectations that stock down about 2 in the premarket. The companys ceo says there are new initiatives coming that will improve the shipping experience for etsy customers shares of Payment Company square are falling earnings and revenue beat expectations, though adjusted results beat forecast the Payments Company is issuing Third Quarter guidance that is weaker than expected square selling its Food Delivery Service caviar to door dash for 400 million. Its not the same as door dash no. Its part of higher end . Higher end. All sorts of things with it. Its been part of square for some time. Theres always questions about why its part of square. Square was trying to really build a reservation system and a system for restaurants and it was an inducement to get restaurants to use the square platform, if you will. Worked a bit i dont think it worked as well. They thought it was a focus that was that they shouldnt be focusing on. They have a spat paeparate parti with door dash. President trumps announcements of new tariffs has businesses worried, well get you up to speed with the big retail losers. And it is once again jobs friday well bring you predictions from our panel of experts plus more importantly instant reaction after the numbers. It all happens at 8 30 futures may move in all sorts of different ways stay tun, u wchg edyoreatin squawk box on cnbc pressure r, and racing. This is also mias pulse. That her doctor keeps in check, so she can find balance. This is mias pulse, and now its more stable than ever. This is what medicare from Blue Cross Blue Shield does for mia. And with over 80 years of healthcare expertise, imagine what we can do for you. This is the benefit of blue. The markets reaction to President Trumps new tariff threat is our top story this morning. Courtney reagan has more on the carnage. This is a fear that now looks like a reality retailers were worried about the possibility of the fourth tranche of tariffs on things like clothing, shoes, personal electronics. Best buy falling almost 11 on President Trumps tweet saying a 10 tariff is coming september 1st. And in may best buy said we think its premature to think about tariffs. You shouldmaker steve madden lost nearly 9 nearly all the product it makes is made in China Gap Inc sells its own goods, and there are no vendors to absorb the costs. They fell 8 even coach and michael kors sold off as well. Many retailers have been working on diversifying supply chains out of china for years, but more u. S. Apparel and footwear is made there than anywhere else. The issue with investors, they want to wait for earnings. But in a statement colombias sports wear ceo calls the tariffs a disaster for the american economy, employers and consumers saying his company and others will be forced to raise prices and lets not tank the economy with the misguided conception that trade wars are fun. All right lets talk more and continue the conversation on the impacted of tariffs on retail. Lets bring in liz dunn, founder and ceo of pro forma i was looking at the averages thinking, okay, couple percent yesterday. Only 45 points today. Then i look at oil, best buy, look at 1. 85 on the tenyear, theres serious moves, reactions to this. Stocks are holding up well, actually we are seeing some effects in other markets, broad in the markets as well. Yeah. I think for apparel its particularly its a horrible event. These Apparel Companies are fighting for their lives in many cases because they already have razor thin profit margins. Theres not pricing power. Theres too much competition theyre dealing with the impact of digital its very difficult for them to navigate this. I think that for a company like best buy, while in general electronic shoo iics should have pricing power, they have been doing a great job competing on price with some of the larger threats. The amazons of the world i think for them it is going to be pretty tough to navigate. Is this the only thing wrong with retail . We have obviously digital competition, but the consumer is strong the economy is good. Things would be great, i guess, right . The consumer is strongish. But this is a direct impacted to the sconsumer some retailers and trade groups are coming out saying this will impact hiring. Thats another impact for the consumer with the rate cut yesterday, part of it is are we causing some sort of self inflected problem . Is this a situation where total retail sales is going to remain constant but youll be selling fewer units and be less profitable as a result just a profitability picture really yeah. Its profitability and units consumers will cut back on some of the more discretionary categories, certainly in cases like apparel, where you dont have pricing power, i dont think any there are very few Apparel Companies that can pass through 8 or 10 . If theyre really weakening their currency and absorbing the damage, could it be not as bad as youre forecasting here when it finally gets to our shores . Immediately no. I think when i think a year from now possibly. There are categories that are somewhat easy to move out of china. We saw it with some of the Leather Goods manufacturers. Im working with one now who is moving product to vietnam and by next year this will be a footnote but it is immediately quite challenging. Some factories are absorbing some of this i think theres still much theyre going to be willing to do looking at these spedrs, thats a move, but whats the high and low whats the 52week on the spdrs . Gosh. Is it in the middle of the range or absolutely decimated . I think theres still more damage to go here. I think we also need to figure out you have to look at the retail picture and who can absorb this better than others as liz is talking about the retailers that sell apparel, they cant spread the pain around if youre a retailer like a walmart or a target, you can look at other categories and say this product is price sensitive. I cant risk raising the price on this because well see that demand fall. But this product doesnt move as often. Consumers are not as sensitive to that price. Maybe thats where i move the prices up. If you sell one category and that whole category is hit, youre in trouble. They got us, china does, in the sense that its been decades that weve been the beneficiary of this cheap stuff. We have been lulled. We let them do whatever they want with ip theft and things that happen over there knockoffs, all that stuff, they showily make like we have bannon on at 8 00 making the case for him no, just making the argument that we have become addicted to cheap things from china. When you try to reverse it, its painful. Whats why were feeling pain here i think the retail groups say we agree there are some unfair practices that china is engaging in but dont take it out on us we dont think tariffs are the way to do it because china doesnt pay the tariffs, the consumers pay the tariffs. You move to vietnam, you move to they got out of the v. A. T. Tax. The border adjustment tax. This is the new thing they have to deal with. Thats true but the retail lobby groups do acknowledge there are issues with china and with the trade partnerships, they dont think tariffs are the way to do it no one wants a Nuclear Waste site in their backyard right no one wants to be the people that take i dont know how it finally plays out it seems like it will be a yearslong confrontation. Probably will be. And it could be longer. Now were talking retaliatory tariffs that could have ripple effects in the economy remember the guy from Myron Brilliant yeah a lot of people switching sides. Salt taxes. Yeah. All kinds of things yeah. I put up salt taxes for the greater good didnt you oh, you dont like that lower corporate tax. I have a complicated issue. Because you have so many different tax shelters that and llcs here, im here. Im moving this over here. Any way, thank you liz, thank you for coming in. When we come back, shares of do you pay anything in taxes . Well break dont move with an early pinterest investor and talkibili ibilitabout the impac President Trumps threat on technology stocks. Thats next. As we head to break, lets take a quick check of whats happening in the european markets. France down by 2. 6 . Germany off 2. 4 the ftse down by 1 . lbeight back. You should be mad that this is your daily commute. You should be mad at people who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Welcome back to squawk box. President trumps announcement of a new round of tariffs against china sent stocks stumbling thursday this coincided way drop in bilateral investments specifically in the tech sector. Joining us whether thats likely to happen again, principal and venture partner, and a pinterest shareholder. Talk about pinterest given the number, but whats your take what this all means. On the tariffs. Yeah. Youve already seen the reduction, the tension created in crossspace we saw it with moneygram, blocked from buying them you know, i think China Investment from the venture perspective is a specialized thing and always been and becoming even more so. U. S. Firms are more reluctant now to do one or two investments in china without a proper presence there. Did you see peter thiel out in the oped times another commentary on this idea that google is giving china information by, by this, by creating an ai lab in beijing and that is sort of arming them, if you will, with a new weapon what do you make of that argument i dont know what the rationale or motivation for that would be on the part of google so i mean, sounds a little farfetched let me ask you a separate question if you owned a tech company, would you open an office in beijing . Do you believe you could open an office in beijing without that information being taken, stolen, used by the government its an absolute risk but these companies that set up there try to put up safeguards and controls to make sure it doesnt happen, but look in the case of pinterest, for example we never had an office there for that reason. I guess the balance of the question, is there more value in having an office and being able to track and use the talent and benefit, benefit from the talent that might well be in beijing son an ai project, versus whatever you think may happen to the intellectual property created in that city probably not. Therapy great talent engineers all over the world you can certainly set that up even in montreal has phenomenal talents so you dont have to deal with all that. Whats your take on pinterest now . The company put out great results. Beat estimates heartily the main thing Going Forward how they monetize naturally a bright spot as well as commerce to this it day most of the revenue, almost all, coming from advertising, but not taking revenue share or taking advantage of fact theyre driving so many sales for merchants. The question is why not its early. There was a program for years ago. Something called buyable pins. You see it today with a new checkout product. Early. The product launched in 2015 might not have been kind of ready for that environment youll see them reenter the commerce in some ways in the coming years. More growth outside of u. S. Than in the u. S. I think so, yeah. And do business in china . Not the foreseeable future. Pinterest is deliberate where theyve grown. They dont grown by turning on the lightss they pick countries they think they can have meaningful advertising revenue western europe, australia, canada, japan, et cetera. When you think i want to go back to the china trade issue a second when you think now about making investments, or let me backtrack. Yeah. When was there a time you said to yourself im making an investment and psyched because one of great opportunities is to sell to a chinese company, and is that ever coming back and what it, there, doing to valuations, ability to buy certain things or think about that it will come back at some point. In the foreseeable future absolutely we have, i have companies in my portfolio we thought about chinese buyers off the table at this point. Thank you for being here. Coming up, much more on the market President Trumps new trade threat and how it could impact you and your money next and talk to one of the architects, steve bannon a little aside less than two hours away from the july jobs reports. What you nd eeto know before the big number hits. Squawk box will be right back. Y to extremely happy. Theres also angry. Im really angry clive actually, really angry. Thank you. But what if your business could understand what your customers are feeling. And then do something about it. Turn problems into opportunities. Thanks drone. Customers into fanatics change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. Global stocks reeling as President Trump takes the trade war up a notch threatening a new 10 tariff on 300 billion in chinesemade goods. The july jobs report in focus. Preview of the data and what it mean s for the market. How tariffs are rocking the basin and beyond as the second hour of squawk box begins right now. Working for a living working for a living announcer live from the beating heart of business, new york this is squawk box. Good morning, and welcome back to squawk box here on cnbc im joe kernen along with becky quick and Andrew Ross Sorkin u. S. Equity at this hour pared down losses to 38 points 38 nasdaq taking down worse, down about 41 and the s p down about 9. The real action that we saw, though, a little bit of a reversal of some of the moves, but the treasuries, ten years, 185. Thats november of 2016. Levels lowest since november and then oil. Which is obviously economically sensitive. Everything else. Finally saw the dollar down 7. 9 biggest oneday drop weve seen since 2017. And the Dollar Strengthen, makes no sense, weakness yesterday. What else is making headlines at this hour 90 minutes away from the july jobs report. Looking for 165,000 new nonfarm jobs Unemployment Rate expected to tick down. More on that in a few minutes. Activist investors carl icahn has a new target a snake a Cloud Software company and plans to push for changes and possibly seek board representation and as often happens when icahn gets involved, stock up by 17 . A gain of 1. 09 to 7. 44 loew loews lows is outsourcing did not describe the number of layoffs, thousands of workers will lose their jobs look at lowes shares another round of tariffs on 300 billion worth of goods. Beijing responding and planning countermeasures. Over to Kayla Tausche. After that surprise tweet yesterday by the president saying the u. S. Will charge 10 on all remaining chinese imports chinas Foreign Ministry had no choice to retaliate saying we dont want to fight but are not afraid to fight. They will not accept intimidation and blackmail and not give in regarding major principles the action came after an Interest Rate cut in response to the trade war and after the lead u. S. Negotiator, briefed the president yesterday on how talks went this week in shanghai while theround was publicly described as constructive sources say chinese officials dug in their heels and little progress was made. Heres President Trump yesterday afternoon. When my people came home they said were talking we have another meeting in Early September. I said, thats fine, but in the meantime, until such time as theres a deal, well be taxing them. This last set of tariffs includes things like footwear, smartphones, toys. Even the treasury secretary ak nomged in a may testimony this round could have a dramatic impact on the economy. The way the tariffs were designed was the last tranche the consumer issue we are monitoring carefully. There will be exceptions the last tranche is subject to the president s approval and exemptions Consumer Products are by design in the last tranche. That last tranche, fw it goes forward, set to go into effect september 1st. Of course, four weeks before noi now and then, guys, because itic tas that long for ships to leave china and reach u. S. Shores but my sources say it also gives china a little time to make concessions. Back to you. Kayla, right. Seems the president laid out in this tweet the path for those concessions basically saying two of his big complaints were they werent buying some of the, the farm, farming things that they had promised to buy and then the fentanyl if they could answer on those two fronts you could see this potential lly pulling back befoe september 1st, well see. And made at the g20 back in december in bane owes aires and the farm goods an interesting part i was told by sources briefed on that g20 bilateral what china said, they would consider buying Farm Products but that president xi was carol not to dmoitocommo so, something they said they never did but the president thought they did. And president and ceo of the Atlantic Council and a cnbc contributor. Fred, what happened . What caused these tweets yesterday . I think this is classic trump. His negotiators came back. They found a much harder line chinese approach one of the things thats changed thats interesting is the commerce minister has taken over and more of a player in the talks and put in the more as a hardline person a person who will stick very much to the facts and any big deal hell take back to chinese leadership theyve done a shift in thinking since may where they believe more and more that the United States is actually out to undermine their rise and decided lets wait out President Trump our economys okay we think its bottomed out things are going in the right direction. I think trumps answer yesterday was, well, youre not going to be able to wait me out im going to make sure thats not easy for you. What do you think happens next i think you will have countermeasures. Lets see what comes before september. Under the current atmosphere where the chinese are not only just looking at this trade situation, theyre also taking a look at protests in hong kong. Worried about independence moves in taiwan. Seeing themselves more and more in a generational struggle with the United States. Not just over what happens in the markets the next day or in the trade talks more of a generational struggle between capitalism and feel they have momentum behind them at current trajectories within five years nonfree countries rated by Freedom House will be the ma jompt jority of gdp firse in a century see the u. S. Out to undermine them. Fred, in terms of timing, seeming to be this well, theres the election in the u. S. , and theres how the Trump Administration thinks about the election and also how the chinese se xi thinks about the election and leverage what would you tell them id say this is longer term dont look so short term the chinese are saying, the president cant hit consumers ahead of the election. Cant hit the farm country i think the president just said im willing to do that, because i think the economys strong enough, and if im tough enough im going to put jay powell until a position hes going to have to give me more, give me more rate cuts. Did the chinese miscalculate . The other issue we saw President Trump in ohio last night he now has a real boogie man that can be a powerful thing. Sadly i think both sides are miscalculating theyre so dug in, in their own political bases. Trump has his turning him on but so does xi xi cant show weakness theyre in a leadership retreat and do that the first two weeks of every august and make major decisions then theyre looking at a dispute with the United States which they didnt want and dont know how to get out of, but looking at a dispute in hong kong where theyve got troops poised on the borders and have to decide whether to go in or not and from there standpoint this is a bigger deal. Theyre even blaming the u. S. For that saying theres a u. S. Dark hand behind that, which is not true, but its become much, much more cold war atmosphere. What i would watch for if i were u. S. Companies is nontariff measures to answer so trump is figuring, well, on a one to one basis i have the strength, because we have nor goods to tax than they have of ours to max. Nontariff measures like bringing in north korea . Not so muchs north korea, unreliable entities list, put more American Companies there. Licensing problems, harassment of u. S. Company employees. Just making life more difficult for companies, many u. S. Companies that are operating on the ground in beijing and throughout china that dont fall under any of these trade deals. Fred, in your comments, you said that china does have more to loose near term, in terms of the economy. And so are they willing to, you said trump saying youre not going to be able to wait are they going to wait willing to wait and take the pain between now and november of 2020 so i, i have a friend over the years in china, chinese. Hes relatively high ranking, and he says that they look at Economic Indicators as political indicators so they have 6. 2 growth in the last quarter thats the slowest growth theyve had since 1992 they have a lot of stimulus they can throw at this. They can do more to juice up the domestic economy with Infrastructure Spending and that sort of thing but then reach the danger of driving up debt. So they are in a position where they feel they were better off than the end of last year economically, but if the tariffs start being jacked up again, the people start disinvesting, you have decoupling of the u. S. Economy from the chinese economy. A lot of kwis, cummings, diesel, apple, reducing supply chains how that china the economic shut far more than the tariffs. Yeah. And so theyre willing to, to take thought it was funny authoritarian capitalism versus democratic capitalism, i thought you were talking about debate but you werent because it was still capitalism jit y right . You would have said, socialism but before the 2008, 2009 financial crisis i dont think the chinese thought they had a system that would be competitive globally against our system. I actually think they believe that and think theyre but hong kong might be making, to rethink whether it is going to work forever. Isnt the writing on the wall . People are you know, a lot of people are doing much better in china than decades ago. Is it like glasnost right how long do the, the call them meager economic substantial economic gains but a lot of stuff there isnt in terms of personal freedom that just isnt with the rest of the world and i think that the internet and Everything Else, i think a lot of people know that by now how long do they say, all right. Im willing to exchange that for economic progress . Well, dont forget, though, in 1989 when the berlin wall fell was the Tiananmen Square crisis now in retrospect the crackdown wasnt as important as the berlin wall breaking down. Authoritarianism wins in beijing. Interesting point. Now we may have another situation like that in hong kong, and august is a time when crackdowns happen. Im really watching that very closely. I think the, the key thing to say to Market Players is, i understand people will trade up and trade down and what people say on trade, but this is a generational contest taking place, and you have to start thinking about, well, who profits if we decouple economies . Who profits clearly year seeing more going to vietnam, malaysia, to mexico. What is going to be the future of our relationship with china and who aside from the economy, whos going to take the commanding heights of technology because that means thats the company that will set the standards, regulatory standards for ai, 5g and all sorts of other things an exciting space to watch. I wonder if its worth it do you think this is worth it what were doing, or not, fred im very glad the president has finally calmed china on unfair trade practices now we need a strategy to talk to each other and reach a truce that understands well be at this for a few decades decades. Right fred, good to see you. A lot more to talk about coming up, its jobs friday. Preview the data and talk markets in a few minutes and later the announcement of new tariffs. Stocks sliding a look at whats fueling those worries. Stay tuned youre watching squawk box on cnbc. 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. Welcome back to squawk box. Futures now down about 53 points jobs number coming up. Nasdaq down 48 and change and s p off about 11 really, todays the day we probably should be looking at yields every time we check the futures, because we havent seen these in quite a while three years. Right . November of 2016. Those levels we hit not quite three years. What we hit yesterday and then the yields weakened from there. 1. 8, 2. 5 now. In the stratosphere. I admit, should you look at refinancing again. And in our country people actually pay you to keep your money with versus germany, where the bund went negative, earlier today. 30 years. Every year you lose just a little bit a little bit take just a little bit yeah. Unbelievable countdown to the july jobs report is on were now less than 90 minutes away from the numbers and Steve Liesman joins us with a preview. Back from washington washington. Thank you. Real fireworks both from mr. Powell and the president. And andrew, before the president announced yesterday potential new tariffs on china kmichts wanted to know howed jobs report would affect slowing Global Growth and the fed chair. Both elevated d concerns mentioned trade war 27 times in his comments and economists believe it already had an affect job growth slowed from 1. 3 million to 965,000 this year looking at three sectors economists say are trade sensitive. Manufacturing, mining and construction, job growth slows from 376,000 to 179,000. What you need to know. Bottom line, more than half of the job growth slowdown from last year to this year came from the trade sensitive sectors eve thon e they represent just 16 of all private Sector Employment may already be seeing an effect. How much persist today the expectations 165, a slowdown from strong numbers back in june, Unemployment Rate down a tick to 3. 6. Average hourly wages seem to have slowed a little up to 0. 2 on the month as the expectation today and adp coming in the place you might expect looking for 165 today. Jobs and tariffs have an affect on the fed yesterdays threat of new tariffs raising the odds of more and or deeper Interest Rate cuts Goldman Sachs writing the tariff announcement tilts the risk towards deeper cuts and raises odds from 60 to 80 . Thinking about that second cut, the third one this year but two from now, the tariff threats looks to have boosted odds to about 50 . Before i got on the plane, tweet came out while on the plane, odds well below 50 for that december rate cut and now back up right there. You saw the tweet on the plane. The reaction from the crowd around you collective groan kind of came out. Yeah kind of ooh. What do you make of the what do you make of the argument powell is in lock step with trump its allowing him to do this . Allowing trump to do this yes just had a guest on that made that comment. I know last hour. I have a hard time thinking that this is all sort of, of one piece. I mean, less than a hard time thinking that the president now sees a way to get the chairman to move. Right. But i have a really hard time believing that hes putting tariffs on in order to theyre separate parts of the brain that we see some kind of connection. The idea he now has a backstop. Thats true but if you ask me the motivation, i have a hard time thinking that powell is cutting in order to give the president the leeway to move. Correct still mad didnt go 50 and even madder at the chinese. Also have a hard time thinking these things are not related. Cuts on wednesday and hikes tariffs on thursday. The guest said it wasnt what powell did as much as what he said basically said we have to watch and see what happens with the trade talks, and the tariffs by putting that into the equation. If it quacks like a duck its a duck stayed six hours give me the check at breakfast, come back, go at 11 30 in the morning, not buying and potentially puts tariffs on. He loses it crazy enough pup dont have to make him crazier for some or reason use that you can turn that into an impulsive mnuchin and can you see their faces . Like, oh, my gosh. Got worse. Maybe the answer is the president feels a little bit freer. Tough emboldened. Because he knows this will result in more likely a rate cut. I do not believe the president some people think this read it in the twittersphere putting on more tariffs to get a rate cut sounds crazy but i wouldnt deny it of the president. And conspiracy theory, i know, but close to new highs again. Can i Say Something else . Which is, i see the opposite here i think that the one thing we might have missed in our reporting about powell on wednesday. He was specifically being not political about tariffs, except he was. He was practically screaming to the president , look, this is the biggest threat this is the thing were most worried about. Hint, hint wink, wink nod, nod if you tonight want this economy to slow down further, which would be how i interpreted it, dont put nor tariffs on. Spoke his mind on Everything Else he should speak his mind on that. He goes as far as he thinks he can by laying out, here are the risks, and it is clear, tariffs and trade and Global Economic weakness of the number one things the Federal Reserve is worried about the president choosing to listen or not to his appointed fed chairman at his own risk. Powell has the economy to worry about. Trump thinks, has got a lot of things hes thinking about economys one of them, but securities, china, the future. All of those things that right, and i think the fed sees it as its a part of it. Theyre going to have to play the hand thats dealt to them. They dont get to pick the cards. All your fat cats in front of the plane groaning, all the private equity guys all own stock, all got i saw it yesterday. I was like, doggone it comcast on its way to 52. Were we going to make 52 . The target a lot of banks in the afternoon or the morning . Kidding since thats the only stock we can own, thats my right your thing. The way i say i care about the stock market for a thing of my own reasons as well saying you see its like, wait a minute we were up 300 looked at it im like right after at the i looked tat right aft eed ar the tweet. 311 down 200 plus a swing of over 500 points which is 2 . Joe you know the president. I do. He cares deeply about the stock market. He does. The number one indicator. You know whos on it . Bannon is on at 8 00 and says what happens with china the most important thing a president can do the most by, you know leaps and bounds how we handle hes got his own obviously viewpoint about that, which is probably for hawkish than almost anyone on the planet, but well hear it from him thanks. Tom friedman. Those two guys. David leibovitz is a Global Market strategist at jpmorgan Asset Management and, chris harvey head of equity strategy add Wells Fargo Securities our teleprompters splits words that arent normally wholl do you agree with were here, talking about the economy. Payroll friday 2q numbers as of late and thin s s clearly slowing down from an economic standpoint weve focused more on potential impact to earnings businesses have essentially cut all of the investment spending in the cap x they can. Unclear they can reduce further if trace tenses continue to es ta late the next thing is hiring if the labor market begins to soften, thats when the outlook for the economy deteriorates could be a series of unfortunate events here, i think. Did you groan, chris . I did groan you did we were watching rates just melt away. And were scratching our head was it foreign buyers see the tweet. Oh i agree with what most of what people are saying. From trumps point of view, its all positive for him political, the fed, china. He can go out on the trail and say, hey, im being tough on china. Which he did last night in ohio and got applause for. In addition to that,puts uncertainty in the Global Markets so puts pressure on powell. The economy blames the fed. Exactly. But can always toggle it back, too. Which was interesting more restrained than he normally is in a tweet like this. Right. Granted, there were mnuchin and larry kudlow and others in the room advising him wan what to say but kept saying even in the speech, my friend, president xi, leaving the door open. Right use as heavy hand. Same token, we can still be friends. Jit youre a litt right youre a little confused he goes out to the nth degree and comes back in. Does it make the wheels fall off the cart no we had a detente that had lasted for a month, a month plus. Now the question is uncertainty. Their idea of detente and ours is probably very different. We think detente, continue to move, make progress. They say, wait and see and maybe get back to you in four months, or longer. Chinese had a great deal and dont want it go away. If they can wake it oit it out, and a half is nothing to them. And focused on the stock market, what the president needs to get reelected is an economy growing and a stock market continuing to go up. Were fundamentally seeing the economy begin to bump into the supply side constraints pt knop just about trade its running out of available workers. He doesnt want to use up all the dry powder today his eye is on next november are and how much hes gauging how much to escalate trade. If people are losing jobs kwumo come election time slowing jobs. Thats the question. I had a formula ive been working with which is potential growth is 2 . I believe the tax cuts and the deregulation of the president hall potential to add 0. 3 to 0. 5 and a rate of 2. 1, 2. 5 to the economy. Back down below 2 and the idea that companies are responding to the uncertainty, not by bringing down capex but bringing down hiring, i think the president gets blame noor. He can blame the fed but i dont flow how much 3. 7 now and go to, what 4 . Still say historically great its not that its direction. And direction maybe im wrong all of a sudden pops up in a big way you have a problem. Number one what youre talking about, tariffs would suddenly have to be a lot more consequences than they have been so far. And your rate of direction, okay so its not going to 3. 2, back to 4. 2 instead of down going up thats a change, but between now and november, youre not going to be in a, a a jobless mess. Most likely. I think youve overthought from the beginning on the effect on the economy. You look at the chart, joe . Do you think thats fair. I dont think so. I dont think so at all. Ive correctly thought through there was a positive from the tax cuts and regulation and negative from and in december thats been forced to reverse course Central Banks around the world announcer time now for todays affleck trivia question. Which car did james bond drive in the spy who loved me . The answer when cnbc squawk box continues. Slime in my motorcycle. No. Thats motorcycle insurance. Slime everywhere . Ughhh nooo, theres no insurance for that. Do they help when i have bills Health Insurance doesnt cover . Yeah thats it aflac gross guys. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com now the answer to todays of a flak trivia question what car did james bond drive in the spy who loves me the answer a lotus esprit. All right welcome back, everybody. Exxon mobile shares is out with earnings look at it earned 73 cents a share. That included a favorable item of about 500 million or 12 cents a share asoviet unisumingn because of a cap in canada strip that back out, earnings gain of 61 cents street looking for 66 cents. Again, the diluted number, 73 cents a share includes a tax gain with exxon mobile not sure which ones include the tax change or dont, but you can see that the stock is indicated up up by about 2. 8 on that we dont normally look at revenues estimates for exxon mobile because the company does not have a lot of analysts that actually put in revenue estimates. Some of the numbers to Pay Attention to, revenue came in 69. 09 billion dollars and Oil Equivalent production rose by 7 and the new u. S. Gulf coast steam cracker exceeded design capacity by 10 . Upstream liquid production up 8 again, stock up by 2. 8 . Exxon mobile was gaining ground before these earnings came out a little bit of bounceback after yesterdays decline for stocks like exsang mobile and chevron based on decline in oil prices that gain looking like 2. 1 gain after earnings came out. Almost no sector is immune totally from a trade car phil lebeau joins us with a check on wellknown names. Boeing, phil, just on a chart, not at december yet, not at december lows, but were way bl below any of the max numbers we saw. Right. The new 300 billion doesnt affect boeing, right its on other things thats my understanding does no affect boeing. The overall right. The trade war getting worse . And the general concern that as the trade tensions continue with china, eventually boeing will become the big target in the room that the Chinese Government goes after. That they say, you know what you got issues with huawei we might have issues with boeing no indication that is happening or that it will happen but thats the concern one reason why shares of boeing under pressure after this announcement yesterday again, you said it, joe. Holding that 340, low as 338 since the max. Now weve punched through that now down to 332. Look at the auto parts supplier this is another if group that is not impacted by this new round of tariffs they were impacted by the previous round but all of them were under pressure late in the day warner, look at tenicco. Any name when it comes to alto parts under tension. Tesla, trade tensions increase, further problems for tesla remember, they build in free mor mont, california, ship to china. In theory you shouldnt see this stock moving dramatically lower but didnt stop traders from selling it off yesterday afternoon and finally the european utomakers pep we show you these european automakers, the president may make an announcement regarding eu trade this afternoon in washington and if he does, will he say, look, looking at tariffs for vehicles or engine thats built in europe and then shipped over here to the u. S. All of these guys, they really havent done anything over the last six months largely because of the trade concerns. Yeah. You would think well, not going to do it today not after china, but you cant say that. You would think you cant say that. Who knows . You say anything trade related people run for the hills in stocks. Use the word do it today it wouldnt you know . He does what he does. All right. Coming up when we return, still 0 come on squawk box, just heard from exxon. Expecting to hear from chevron with their Quarterly Results in a bit. Discuss oil stocks many hit hard on yesterdays trade news and it is jobs friday always comes 23569er than you think. July numbers will be released. All happening 8 30 a. M. Eastern time this morning. Bring you the data, instant market reaction. Dont want to miss it. Squawk returns in just a minute. Lets do it. [ sniffing ] come on. This summer, add a new member to the family. Hurry into the mercedesbenz summer event today for exceptional offers. Lease the glc 300 suv for just 419 a month at the mercedesbenz summer event. Going on now. Tenneco. Driverless cars. All ground personnel. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. Higher now following the companys Quarterly Report earnings of 73 cents a share the expectations of 66, but it did include a 12 cent benefit from tax changes Brian Sullivan covers the oil sector for us. You figure it out. Yeah. Down could be a rebound today from yesterday as oil rebounds or could be that the 12 cents was the maybe some analysts figured it out some didnt. Whatever you say, no ones going to be able to prove you wrong. A dirty secret in television. Heard you talking tab in the commercial break because thats what we do look at the top line number. Becky said that. Eps, tax benefits, share buybacks on that basis, yeah, exxon beat. A billion and a half more than the Consensus Forecast still, though, going to be a decent story today up 2. 4 guys, this is a onemonth chart. Even with the gain were seeing here still a couple bucks off. By the way, exxon is about the best performing Major Oil Company of the last couple of months, and its well underperformed the s p 500 Oil Yesterday, down nearly 8 . Cratered worst day in a year. By the way, didnt get a lot of attention. So much was going on this is yesterday. These are some of the higher cost Oil Producers whitingetroleum yesterday down 38 . Concho, oasis, got smaller yesterday, oneday drops xop, biggest etf has exxon in it look at that up now a percent but look at the drop yesterday where we saw that tariff tweet and then just kind of a continued slide down heres the stat of the day call it the rbi. The average return of a Company Operating in the basin over of the last months is a loss of 45 . In the past month. 30 days. 22 stocks in the oil patch are down 20 or more these companies, many struggle, guys, or go away i know its jobs friday, there are millions are jobs in oil and gas. Oil continues to weaken up, guys not sure what will happen with the job market look at that negative 43 for every company on average operating in the red hot permian basis. Ate a lot of debt in these always al debt story. Thank you and Steve Liesmans point made earlier about job losses and what that could mean and affect on elections and Everything Else a check on currencies are affecting us from Clearview Energy partners Senior Analyst at fx treat hearder what brie hadnt to s ey what do you do about this . The bearish story is the leading story. Not just the front risk, you can see trade tensions, frictional loss of demand, but also the hah background this is keeping oil aloft and geopolitical risk. Still have shortfalling by acute events even in a time of chronic risk when you go into the front of next year, though, you have seasonal weakness and youll see demands softening anyway at a time which inventory builds read by the market extremely bearishly. What do you do about it . Producers will do better or worse depending on the price differentially we see oil moving to the down side 65 to 70 room to travel up still this year next year, 60 to 65 with room to the down side on trade i think that the second half is really, got seasonal strength helping a lot. Kevin, im worried the hedge start investing restructuring bankers, though. No part of what phil lebeau said i would keep in mind were watching china dont forget the eu trade story. Multifaceted demand side destroyer and could show up later in the year. Talking 4q think when its time to refinance and restructure debt towards the end of the year. You could have an even worse environment. Talk currencies, joe. What are you doing jeds movyesterdays move looking at connections. I try to. Yesterdays move, a surprise tariffs took everybody by surprise off the back foot nobody really expected this. You have the dollar reacting immediately, because this looks like, well, maybe the fed will lower rates more but its really a global trade story as everyone said because it really is true, that whatever affect this has on the United States and its economy,ratified around the world. The dollar got sold a little bit, the immediate reaction. If you looked ahead, whatever the fed does will be either duplicated or envied by other Central Banks. Doing one thing. Cutting rates or providing more liquidity in a case like ecb not looking to cut rates on bank of japan the rate is already negative in that situation you have the u. S. Economy still in better shape than everyone else thats one you also have something on the chinese side, which, of course, is hong kong so i was thinking after i heard this news. Why would the president choose now to put on tariffs . Well, his goal is a trade deal with china china may be under more pressure than is obvious in the economy sense, because of hong kong. Whats the chance, by the way we always discuss what the president knows before everybody else knows whatful he knows the job number will be pretty good . Gives him more leverage . Yes anything that keeps the u. S. Economy rolling, gives a sense of that is good for both his trade policy and the dollar. Wouldnt have found out before the tweets yesterday. Probably not but i dont know kudlow explains when he gets the numbers, its late. I would be cavloathe to speculate what mr. Trump knows. Kevin, thank you, joe, thank you. Appreciate it, guys you bet. When we return, the trump agenda and reaction from many the governor of West Virginia. That interview is coming up quk xilbeig b sawbo wl rhtack. Were reversing decades of clamanous trade policies that led other countries to pillage our job, plunder our factories and devastate ohio communities and communities in every state. The era of economic surrender is over. That was President Trump at a rally in ohio last night joining us now is jim justice. Hes the governor of West Virginia governor justice switched his Party Affiliation from democrat to republican in 2017 and governor thanks for being here today. Thank you for having me do you a wonderful job every day. Appreciate your being here. When we first booked you we wanted to talk about all the great things happening in West Virginia and were going to. Highest per capita gdp growth youve seen in any state in the First Quarter. I want to get to all that. Because of china front and center right now and the because of your States Relationship with china, hopefully we can start there based on what we heard from the president last night. Sure. China has promised to invest i believe 84 billion in West Virginia when you hear things like this with the trade talks and pressure ratcheting up what do you think . First and foremost, china has promised the u. S. For aening although, long, long time. Our president s doing a marvelous job. Thats all there it to it. 500 billion trade deficit with china is unacceptable in every way and we have to renegotiate another deal what hes doing with tariffses and everything, sure, could be hutting and hurting different people in different sections of our count right now in different ways but weve all got to step up to the plate and everything i think absolutely without any question whatsoever well get this worked out. And end of the day better for all of us. What has been the situation with china to this point slow to coming to thelooked into that 84 billion they promised to invest. Not the only place china renegedwhat do you see happening . I really believe the chinese are truly interested in West Virginia because of the industry, an incredible, incredible promise, but when i guess we got on a bigger level than West Virginia, you know, got in a little, you know pushing battle back and forth in regards to the tariffs it shut down everything and everything got shut down. They still come and still are sending delegations and doing a lot of work and theyve spent a lot of money doing a lot of that work, and i think its real, but same time, weve got to run down every opportunity in West Virginia and try to do that, because im a business guy im not a politician you know thats what the media and people have such a hard time understanding President Trump over, because hes a business guy. You know hes not one of the lifers that grew up as a position and sell influence and all that he doesnt care about all that hes doing a great job and West Virginias doing great stuff and were all happy. Looking for potential investors where would the replacements be . Other countries or investments from the United States we have, weve had interest from qatar, but we have real, live interest within our own country. The whole premise is just this too many eggs maybe in one basket in the gulf, and you know, and were exposed there. I always say this. I talk, you know they say always folksy, but it boils down to it, you always had the hog confinement building near the corn field and youve got to youve got to look at the petra kem calle pockets where natural gas is the cheapest and theres so many opportunities within the natural gas. Thats flight our lap in West Virginia. Governor, you just switched okay switched parties that is. You could be still a democrat and you could, seeing your most moderate candidate at the debate the other night, joe biden, say no fossil fuels in ten years get off fossil fuels in ten years. When youre in detroit and you say that, in michigan. If youre in West Virginia if youre in ohio, how do you possibly win those states when you say youre going to put the hydrocarbon you dont win those states. In the next ten years we hope and pray you dont win those states i mean but youd have to right now have to be backing joe biden if you were still a democrat. Yeah, but no way on gods earth i would do that. Even when i was running as a democrat i wouldnt back hillary. Up know . I good not endorse hillary in any way, shape, form or fashion. Manchin, too, hes joe just jumps around and Everything Else and joe is a politician hes a great politician. Youre not a politician. No, im not im a business guy i tell the truth i tell the truth all the time and i challenge anybody to find me not telling the truth. Youre not a politician. No, im not. Quickly, mining, one of the big booms weve seen in your state. Why you had gdp in First Quarter of 5. 2 leading all 50 states. Right. What do you see in terms of the economy . Whats your outlook . Our Mining Industry bounced back no question about that and everything President Trump has been a big contributor there. The export thermal market was a big contributor, metallurgical and steel market a big contributor. But we have to have an allin approach in West Virginia. Our tourism is booming manufacturing is booming were building roads like crazy and everything we have a roads to prosperity thing and were doing it weve got a real life commitment to education and things are happening all because its allin its not we love our coal miners and wish we could have more and more coal miners to work but end of the day weve got have an allin approach. Governor justice, thank you for coming in today. Appreciate it. You guys are great. Thank you yall. Thank you. Coming up, former white house strategist steve bannon is our special guest joining us top of the hour. Of course, the july jobs report set to be released the numbers, a little over 30 minutes away the president , by the way, see that last night maybe around 3. 5 in his rally. See what really happens. Back in a moment. Global stocks slammed after President Trumps new tariff threat to china. We will be taxing the hell out of china thats all there is. Kick off this hour talking with a man behind much of the trump playbook when it comes to china. Former white house chief strategist steve bannon. Its jobs friday in america. The july employment report taking on new importance for the feds rate cut strategy. Numbers due in half an hour. Plus earnings alert. Exxon mobile beating bottom line latest quarter and chevron due out any minute the final hour of squawk box begins right now. Live frompowerful city in the record, new york this is squawk box. Good morning welcome laback coulsquawk box. Im joe kernen along with becky quick and Andrew Ross Sorkin nasdaq down 55 and s p indicated down 12 and change treasuries if you just are waking up, werent paying attention yesterday, sub 2 number on the ten year 185 now. 185 lower than at one point in germany turning negative on the 30 year. Right to the story impacting markets around the world President Trumps threat to impose tariffs on all remaining imports to the u. S. From china works out to a 10 tax on 300 billion worth of goods global stocks slid today taking a cue from yesterdaysstreet President Trump spoke about the tariffs at a rally in cincinnati last night. Weve been losing hundreds of billions are chine in it has to stop and they understand that. President xi is a good man a friend of mine he understands it. And until such time as there is a deal, we will be taxing the hell out of china. Thats all there is. Okay now, to are more on the president s china tariff threat, welcome former white house chief strategist steve bannon. Bannon known as an ak detect of many of trumps America First policies and steve one of the main things that you used to, in terms of being a president ial whisperer was about china and few people around us as hawkish as you on china or as worried about the eventual way that the plan looks be s in 2025 and 20 china continues along its current path subpoena any surpriany. Is anything surprise ug . This is to the core of what donald trump believes and understands. The architect of this from day one. Go back through the pattern how this has developed, his consistency has been remarkable. Not just what he said over many years what he said on the campaign trail, you heard last night the response of working class and middle class people at at rally in the midwest. From maralago through yesterday, its very consistent with what the president laid out and has to happen. Its pretty remarkable how the chinese have tried to, the ccp, what its about. The seener in leadership of the communist Chinese Party tried to gain the system once again use of american leaders. Business, finance leaders buckling under this false, you know, this false concept of engagement donald trump has been consistent i think coming from buenos aires and osaka. Two basic things to commit to. Purchases are agriculture product and stopping of fentanyl killing you what 28,000 to 50,000 people a year and couldnt even do that. I think yesterdaywas a very important day in American Economic history, because on september 1st were going to cross a psychological barrier. Every good that comes into the United States from china will have a tariff on it. Yesterday was a very big day i think President Trumps given the Chinese Communist party enough time to respond to this fundamental restructuring of their economy that hes been working on and theyve got a leader now whos not going to back down. Youre on record saying that the most important thing a president and in this case President Donald Trump can do is to have this, this for lack of a better term, confrontation with china . This is the most important thing, if its one term, two terms whatever, this is what hell be remembered for and you say youre watching history unfold realtime . Yeah. Ive been talking on this show to you guys the last four, five, six months from around the world. Its been pretty straightforward this is the defining event of our time the relationship between china and the United States is going to set, i think, the framework for how we go forward as a world, a World Economy for the next 25, 30, 40, 50 years. Thats why this is history in realtime i think whats quite remarkable is the Foreign Policy establishment, all the elites, all the geniuses that got us into this situation. Remember, we deindustrialized this country because of this this is wall street and the Corporate Leaders this is the i. R. Department of all of these investment banks, Goldman Sachs, all investment banks and giant corporations that got us into this situation. The american elite this is the fundamental reason Donald Trumps president of the United States. Return of american greatness bringing Manufacturing Base back its not easy. Thats why i think hes unwavering in this. Steve, speak to the political cal kl calculus here. Described what it means, an election coming up and how chinese are viewing that election, how the Trump Administration is tru viewing that election. The idea fighting this fight throughout the election. What the tariffs ultimately mean to jobs in the United States, if we actually do see a fall in jobs does that actually impact the president . To the extent you would be advising the president or thinking about these issues, how do you see it . I think clearly the chinese are hoping for a Democratic Administration i dont think theres any doubt. Even with jim cramer brought up economic patriotism of Elizabeth Warren the other day her paper. If you look at biden, look at harris very weak on china President Trump understands the china situation will frame 2020 particularly because its about bringing back our Manufacturing Base one thing people miss, though, i think, is the concept xi because hes consolidated power after the 18th party congress, hes voted on every day by the powers that be, all of these factions in china and put hardliners in charge lee ha lead negotiator, reformer, essentially laird by sang, a hardliner youve seen the negotiations go sideways the pret understand the not just immediate politics of 2020, the direction of the nation and free market capitalism and the next 20 years those who mock this guy dont get the fact he understands deeply what the geopolitical struggle is and how important this is. This is going to power him to 220 because people see this is what leadership is, what president ial leadership it. Reading the tweet yesterday, parsing at trying to see if there was room for maneuvering on it. Seemed he kind of laid out a path to put a halt on some of these tariffs before september 1st if china went ahead and bought farm goods president xi promised they would do and did something about fentanyl, goes back to the g20 meeting. Did those two things and tariffs materialized, how would you feel about that becky, i think this is what i when we first came on his signaling, from maralago forward, hes always laid through a path of how the chinese, we could come to some accommodation. He still calls president xi his. Very much broad. Two things in the world, cheong and huawei the president of the United States is trying to work with the chinese. I 100 agree he signals strongly to the chinese what you need to do to go forward theyve renieged on many, many o the basic things particularly, a sina con sinacon, had to be addressed, properties, intellectual properties all that. Chinese reneged because of weak leaders in in the United States they had to confront yesterday he signalled to the chinese again, committed to this in osaka heres what you need to do if you dont do to september 1 is it the it were passing a psychological barrier. Everything you send to the United States will have a tariff on it. He reinforced that last night and you saw the response from american patrons up in the midwest. This thing gets more serious and focused every day. How did hong kong play into this our president , president xi, looking here, looking there, wondering how many things i want to be juggling at once i think i dont want something thats unfortunate to happen, obviously, and its concerning to watch, but that seems like its helping trump as well in this because, you know, if that cat gets out of the bag, in a big way i dont know i dont know how that ends. You know, the worlds media, which is, you know, the party at davos khmer khalidi cheer pr le cheerleading quad. You talk about new york city being worlds financial capital. Correct. The other two, city of london and hon hong kong. Hong kong particularly English Common law and Chinese People can do when united. The people, these young patriots in hong kong are fighting for free market capitalism president xi i happen to believe, i believe youre going to see these patriots, these young chinese, these millennials being tear gassed, having bullets shot at them and riot police come in and beat them i happen to believe theyre going to stand i dont think theyre going to break. They understand what the future is and how important to have the rule of law, and theyre prepared to sacrifice themselves, and i got to tell you. I think this weekend if the Chinese Communist party declares martial law in hong kong, problems i think it shows the statesmanship of President Trump. He is trying to work with the ccp that has clearly mishandled the situation. Trying to work with president xi and president xi made consistent missteps, misreading of the strength of President Trump and the western democracies pulling together i think president xi has to start paying attention to the signaling President Trump is giving him to get out of the situation, got to tell you i dont think the worlds prepared to have another Tiananmen Square the worlds changed in the last 30 years they declare martial law on sunday, looks like we could be heading towards that path and i dont think these chinese, young Chinese People will back down, i dont think the worlds prepared to hey lew the Chinese Communist party to have another Tiananmen Square against these young people. I dont know how much you saw of the debates but sure you read about them at least. Do you think biden is frontrunner, or i dont think i dont know. I think maybe Kamala Harris. Ive heard people say shes in the poll position right now. Whats your view first off, i dont think joe biden look, on the polling and whatever this polling is, i just dont see it. The Democratic Party want to take on donald trump i got news flash for them not taking on donald trump with joe biden. Not a standup to the withering assault that it donald trump dwr youve got to bring it hit a fastball joe bidens days hitting a fastball are many years behind him. Shows, i did get a chance to see those although im down on the border i dont think people i think its still a pillow fight and Kamala Harris and leadership of the Democratic Party are not addressing the central issues in the world today and very weak on china. Biden is aproeshs trocious on c. Hes soft on china Kamala Harris is soft onchina. This is the key geostrategic, to be commander in chief you have to have a defined point of view and let the American People know that what that is. The debates, a summer replacement show thats not getting picked up for the fall ratings down, no energy. I dont see excitement in these candidates still got people on the sideline i think this democratic primary and the makeup of this thing is, bloomberg, clinton, youve got pretty savvy people on the sidelines i think watching this and right now the Democratic Party think theyre going to beat i think the Democratic Party was if they want to take out donald trump, i dont see anybody on the stage end of the night that will come close to taking on donald trump. You see Michael Bloomberg and Hillary Clinton jumping in to this i think that people are going to step back and watch this and look in to the fall of this year, and see if any of these candidates really come up and step up to the plate and can take on donald trump you know, donald trump donald trump is not only i think a great leader as a president , hes an amazing campaigner i think the Democratic Partys number one objective is to defeat donald trump. I dont see it on those stages maybe it emerges it hasnt yet but by this fall, you know, by this fall, iffing it hag not emerged one of these candidates can take him on people like bloomberg, clinton paper me mock and ridicule those this democratic primary whos going to take on and defeat donald trump, their number one priority has not emerged yet. As far as our words go, steve, i didnt hear russia on either night of the debates but heard racist a lot and heard that there are suburban people, im not getting gender specific concerns the tweets, divisiveness or being so confrontational can turn off voters that trump would need and that someone like a Bernie Sanders or someone like that could eventually be elected. Do you think thats a real possibility, or no no. I dont think its a real possibility. I think people also, remember, one of are the things the American People, give permission to vote nor commander in chief Bernie Sanders is not going to be commander in chief of United States of america. I dont think thats going to happen other candidates could be, if they could step forward but i dont think you see it right now. Look, i think President Trumps, the logic, goes back to the 16 campaign what the hell do you have to lose remember, working class african meshes or working class hispanics are a part trying to pull together this trump constituency i say if you bring in working class africanamericans and working class ispanics, you can put together a governing agenda 30, 40 years here. Thats about low unemployment and wages starting to rise the key. If you really poll hispanics, they understand a lot of these manufacturing jobs that have gone to china, they would be filling, if the jobs were back here in the United States. This is what President Trump i think President Trump is confronting something weve avoided having a real conversation on. Steve, but how do you explain these what might be described its a, have been described racist, retrograde comments about places like baltimore and other places that clearly have an impact on the National Discourse . They do, but look, my mom comes from boug s fros from bale i was a colts fan growing up the inner city, the point of President Trump on both immigration policy to stop this constant competition by unskilled labor. Really to focus on ameritocracy for even for immigration for regular immigration. Trying to go in to baltimore and detroit and st. Louis and have a renaissance and say its the whole reason we argued about getting troops in this drawdown in afghanistan take that capital and put it to inner cities i think President Trumps got a well throw through plan here and tell you hes not backing down were going to have in conversation beyond the thing throwing up hes a racist and get down to the fact why baltimore is in the shape its in or detroit is in the shape its in, wooey is st. Louis in the shape it is . Retrogade. Look, hes got a different house style but you know what . Hes trying to drive home the point. We have to have a real conversation about this. Youve owned bitcoin how long three years, or how far back does it go and were you buying down when it got down to 4,000, 5,000. Bitcoin bannon i would like to say i had enough, had enough foresight and courage to buy as it went all the way down no i think cryptocurrencies have a big future really do. Could be a very important part Going Forward particularly in this global populace revolt. And fed making it lgts easier maybe to make that sale to people about nonfiat assets, i guess . Wouldnt you say not the fed listen, i think the feds policy has been terrible up until here recently. This thing has been one of the reasons i think for the economic numbers and hopefully the Federal Reserve chairman understands about this over valued dollar, but look, i also think that the fearmongers about what President Trump is doing on the tariff side fail to understand that the chinese have been cutting prices and devaluing the currency doing currency manipulation since the first tariffs in february of 18 cut 10 . 100 tariffs on everything september 1st and psychological barrier of seven you know the exchange rate. Going to i believe theyre going to blow through that psychological barrier and a new day. Steve, on the crypto front, what did you make of the g7 and regulatory scheme sort of have a freakout when facebook announced a lieber plan and what does it mean to regulation longer term over things like bitcoin look i think the Central Banks in all of the, the Central Banks and banking communities want to regulate get in and regulate crypto they want to still stick to fiat currency i think facebook was principally against some of the chinese alibaba, 10 cent et cetera, these Payment Systems. People need to look how the chinese and third world countries and Subsaharan Africa and south asia potentially latin america are starting to put Payment Systems in that will give them, try to give them global dominance and able to get off the reserve currency of the dollar is what i think has to be looked at. Steve bannon, from the border, in oracle, arizona thanks for touching on all of these different subjects see you again. Hopefully soon. Coming up, ten minutes big news coming. July jobs report due out Just Moments Away predictions from our allstar jobs panel and then thbie g number and reaction right after this. See thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade coming up, the final countdown of the july jobs report next. Can i get some help. Watch his head. Im so happy. Whatever they went through, they went through together. Welcome guys. Life well planned. See what a Raymond JamesFinancial Advisor can do for you. So, every day, we put our latest technology and unrivaled network to work. The United StatesPostal Service makes more ecommerce deliveries to homes than anyone else in the country. Welcome back to squawk box on cnbc live from the Nasdaq Market site in times square. Predictions in our jobs panel ahead of the 8 30 jobs report. Former cea chair and from strategyist and Steve Liesman here what do you think . We think 162,000. 162 yeah. 162. 5 or exactly 162 . 162. Santelli is here, too you dont give predictions right . Liesman, you dont want to do the it our chief Economist Says 160. So 174 now. Oh, you do . Private sector rick, where are you 196 196. Do that all right you might still do that price is right stuff taken sorry. Hes going to get mad. I dont wait for the for the obama officials last let me gelt you first doug will be hear about it on twitter if i do, if i do you before him jason . Ill go with 180,000, 170,000 average this year, add 10 for the census. Now oug im at 120. The Geographic Center of gravity is 90,000. 120 is a good number where were headed. Jason, did you see that, the journal piece the other day . Are you feeling better about what the bureau of Economic Analysis said about wage gain ace cross the board . Did it make you happy . I want so much to make you happy but better than previous years right . Im always happy. Good wage gains at the bottom. Need some on average and see now if we get that. The point was made and i didnt mention Larry Sommers or you or any in particular liberals who argued, deregulate supply side things, can get wage growth do you attribute it to that or not . Look, we had 2. 5 growth q4 over q4 last year. Not wildly different than we were getting before. You averages 17. This is extremely low Interest Rates. Averaged 17 now 2. 4. Include the recession. Okay. How about you, doug . Deregulation an enormous impact on the economy. Tax bill in that positive, net positive without the trade head winds wed be above three. I think stimulus boosted growth last year knop doubt about that along with that saw wage growth break through 3 the question, can it be sustained . Thats the critical question. Just a few seconds left ef before the official number ahead of that dow futures down 42 points. In the red all morning long. S p futures down by throws to ten and nasdaq off by 47 and watching whats happening in the bond market closely. After trumps tweets concerning the trade tariffs, that saw incredible pressure on the ten year right now yielding 1. 878 . 164,000 nonfarm pay rolls rose by 164,000 jobs in july right in line with expectations. Unemployment rate meanwhile unchanged at 3. 7 . Now, average Hourly Earnings rose by 8 cents to 27. 98. That is a 3. 3 increase compared to the previous month and over the past 12 months up by 3. 2 . Looking back to may and june, however, disappointment. Mays job number was revised downward by 10,000 jobs from 72,000 to 62,000 jobs. Junes blockbuster number also revised downward by 31,000 from 224,000 to just 193,000 jobs all told, 41,000 fewer jobs than previously reported and the threemonth moving average is now 140,000 job as month the Labor Department also highlighted what it called markedly slower job growth in manufacturing. The sector added 16,000 jobs in july, but the average so far this year is just 8,000 jobs compare that to 2018 when the sector was adding 22,000 jobs a month on average the manufacturing work week is also down. 3 hours to 40. 4 hours in july. That is the lowest level since november of 2011 the Retail Sector also continued to struggle. It lost 3,600 jobs in july that is the sixth consecutive month of declines. Now, where we saw strength was in professional and technical servicess that sector added 31,000 jobs. Health care added 30,000 jobs and social assistance added 20,000 jobs. Labor force Participation Rate also edged up slightly from 62. 9 to 63 and broadest measure of unemployment fell from 7. 2 to 7 . Guys elon, thank you so close get reaction from our desk didnt go over price is right. 162. Jason, sorry painful. 160 but you dont win. Good report. Yeah, its a good report. Even with the downward revisions from the previous report, still a good number. You expect average earnings up 0. 3, better than expected. Unemployment up to 3. 7 participation went up. All in all, a solid report. Do i have the wrong two jasons where were you 160 thats you, then. I quoted fi fuhrman. Didnt correct me yelling at me didnt want to interrupt. Lets see rick, why were you so high and are you disappointed how were the revisions well, i think of, well get revisions up next month so come back and revisit my guess. You know what . I think its a very average report everybodys thinking lacelace late cycle get trade issues, supply chains moved, maybe turn out better historically looking at it from the future i think regain horse power in jobs three thi things in the report that are big, average hour workweek disappointing represent a lot of lost jobs. With respect to wages, not too bad on wages recouped a little bit up at 3. 2,. 3 month over month best news, including more people we forgot to count in the labor force on the Participation Rate. To me its average, c, cminus report because i am more optimistic dont think jobs has run its course one of the jasons probably understands that eight years i think we were on hold with regard to the economy. I dont even think you include that in the longevity of this expansion. Rick, got a contingent not optimistic because of the tariffs. Think well see serious job growth that could threaten reelection of trump do you see that . No. I dont think were particularly late cycle talked about that. What about the latest round of tariffs absolutely impacting manufacturing. You saw that in this report. Probably impacting the willingness of companies to spend on capex this year thats true. Same token it can change quickly. U. S. , the structure of the gdp report is such that its difficult without participation of the consumer to get a recession. A slowdown but hard to get a recession. Jason fuhrman, is this going to be a big problem in terms of the economy and also jobs . The latest round the 300 billion . I think the latest round is a big problem for consumers. Consumers. Hit apparel, going to hit mobile phones, toy, a lot of things people buy. What about jobs, though where i think youll see i think youll see it in the real wage numbers more than you see it in the jobs numbers this stage of our economy you know, our Participation Rate rose this month. Puchlt 6 fe u6 fell to a cycle low Biggest Issue isnt the number of jobs but how much theyre being paid and tariffs are not going to help. Theyre going to hurt. Douglas im going to agree with rick and jason in that i agree with rick the bad number heres is the workweek troubling development. I dont like that a bit. Really strong numbers in participation and wages. Thats how we should grade the labor market not on the number of jobs. The demography dictates that will slow. The labor market is performing very, very well and im concerned about the latest round of tariffs hits the household sector thats been carrying it and not what we need at the moment steve, i mean, referencing your, your worries do you want to im a little more worried about this report than maybe the average bear here. I dont like the revisions to the prior month. Look, lets consider the framework. The framework is we expect job growth to slow, and the threemonth average now is off by 100,000 compared to where we were in january. Threemonth average now 140,000. Slowing maybe a bit more than i would have hoped for manufacturing and construction, manufacturing not too bad this month. Elon said overall average for the year is down and could take another hit. Retail is just a sea of negatives. One after another. One negative, and something i like to look at temporary help a sign of future hiring, thats down now either negative or just up a little bit over the past three months i think do you have a cooling here i dont know how much of it is related to trade and tariffs of the service sector. Seems to be doing okay at 133,000, plus youre getting a big boost from the government here youve done 16, 14 14,000 over the last two months thats 30,000 jobs have come from an increase in government having a chance to look at that, havent had a chance, state or local, but we want to watch this carefully. The job market has been the thing that has been you could point to it and say the economys not slowing that much and a guest in the last hour said if you can no longer express your concern about the future, through a decline in capex because you brought it down much as you can, you might then as a Corporate Executive express that concern through less hiring. So thats where im my big worry is. Interesting i was, that was a guest we had here who brout thght that u. Further capex to come maybe or hiring reduced because of that a lot to be said for as much center as you can provide the business. Although funny at a time were cutting rates, worried about whats happening, the worst we can come up with, they may not hire as much not that theyll be firing necessarily . Thats right. But then a rise in Unemployment Rate as a result joe was right. Last hour said you cant really raise it that much, because its a very long way to go until unemployment gets worrisome but watch softening. A hard thing to calibrate. Immediately it said theres nobody around left to hire you know its you just wonder when, when zandi comes on, usually says, what do you expect not enough people around to hire. Were not going to go if corporations stopped hiring or that is true. Wages, price, wages will give you that indication. A weird thing though, jason you have not had this classic supply demand relationship. I would think, though you would think. That price would be the arbiter of where supply and demand f. That were the case, though, you would have had much stronger wage growth that suggests more slack in the labor market than you might think. That the labor force participation, more people that can come in to the labor market as a result. Or theres another issue, whether immigration or other things, that are changing the supply demand. My theory, what its worth, i think if youre going down the experience and skill set of people youre bringing from to the workforce as the labor market gets tighter, they do not command ay w higher wage. Precisely. Add one thing that i think we could have 130,000 or so jobs and actually keep Unemployment Rate steady. The threshold, we werent going to maintain 190,000 per month in jobs as we have less workers and the whole overall economy matures youll have less job growth. I dont necessarily see this report as worry soisome but agr with steve we dont know where it leads coal hiring be far behind . Thats a concern. Can rick give us a quick rundown whats happening in the Interest Rate markets out there . Rick, i dont see much change at all in the futures market and the outlook from the fed from this report . No, no. As a matter of fact, whether you look at the dollar index, 2s throughs 30s, not much changed and peripheral markets one thing worth mentioning fed fund futures in the december month, the catchall of all the log jams in front of it, up about three ticks today. Up yesterday after reversal on fed day. The market is bringing back expectations dollar futures, mixed bag thats posttariffs. Not postjobs . Well under way in earnest before the tariff tweet and it did accelerate after the tariff tweet. Right okay. Hmm. Okay youre too quiet. The other jason. Fuhrman . Give us some we need wisdom from you look, i mean were seeing slowing pace of job growth it was interrupted last year by the fiscal stimulus but now were back on, you know, the same track and trend line we were on before that finks stimulus. Im not worried about that 3. 2 over the year on wage growth is pretty good, but it was better six months ago. And where is that . Whats that a sign of . Maybe a sign theres still more slack. Im worried its a sign we dont have enough productivity growth to generate the type of wage growth wed want, and to get productivity growth you need real reforms im not sure the ones we have are going to do it. But will the economy be a positive story by the time the election rolls around or will there be signs of a crack in the economy by the time november of 2020 is it a tail wind or will it be neutral or a head wind in the absence of a policy era, a tail wind benefit the president. You know, if you look at it right now. Hold the election, the democrats are not talking about the economy, because they have nothing to say i mean, its doing really well so the question is, would that change between now and november of 2020 . I think only a big policy error would do it. The fed and the president both really have to play this right. Okay. N need to save time to thank everyone let me do this, thank you all. Thank you all. Jason and the other jason i know youre name but trying to think of a better way to say it. And thank you joe. Oh. Youre thanking him. Im thanking you. Nobody ever thanks you. Oh, youre thanking me. Okay coming up, digging into this mornings results from two of americas Biggest Oil Companies and then talk about the latest u. S. Tariff threat towards china, and what it could spell in terms of disruption in the Energy Sector. Something every investors needs to hear. Stay tuned youre watching squawk box can on cnbc. Lot. We create Financing Options for your customers. 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The governments july employment report showing a gain of 164,000 jobs Unemployment Rate 3. 7 futures are down a little bit from the where they were prior to it. Not a lot of movement right after it, basically unchanged. 85 on the dow. S p off 14 dollar, quick look versus i guess, probably look at the index itself. As you can see, its been, finally, going in the right direction. I dont know what do we want . What do we want . You wanted stronger or weaker yesterday weaker after the trade tweets. Keep hearing its too stubbornly strong. Check out the ten year you can see it all the way back to almost 1. 88 while talking jobs got another big Quarterly Report chevron out with its Second Quarter results. Earnings in at 2. 27 a share better than the streets consensus of 1. 78 including onetime benefits. Analysts generally included those items in estimates you can see chevron shares up by about 1 chevron joins exxon mobile as the second major oil to report this morning exxon shares trading higher after its report joining to talk about these companies and how President Trumps latest tariff threat could impact that Energy Sector is john killdorf, founder of a capital and cnbc contributor and selloff in Oil Yesterday was sharp and it was steep 7. 9 just came, the worst day weve seen in one day since 2015 was it warranted f a handful of the biggest losses on record actually look, a lot of things going on that hit the oil market yesterday. Beyond the tariffs one of the other rumors in the market is that President Trump has tasked senator Lindsey Graham talking to iran to strike annie cord that undercut the iran tensions. Commodity remains under pressure spectacular Dollar Strength another Pressure Point on commodities in general but oil in particular. Yes, oil prices have taken the tariff situation the hardest of all asset classes. Keep saying that, because theyre breadbasket, demand growth breadbasket, asia, has taken the tariff, u. S. china trade wore the worst as a region. What do you think of exxons and chevrons numbers this morning . A mixed bag look okay on their face. Give both a cplus exxons profits down year on year youre supposed to a commodity obviously in trouble no matter how much they talk about refining and chemicals, this and that, end of the day, low oil prices and low Natural Gas Prices particularly in exxon mobiles case youre hurting also, too, now with the global slowdown, sometimes low oil price, reduced input cost for the petra chemical segment of their businesses which are substantial. Slowdown in the Global Economy, less pretro chemical and hits i hard another drag. What can they do about that almost out of their control if youre just watching oil prices and Natural Gas Prices again, you are exposed big time to the commodity and now you have an added, you know, drag of being exposed to the global slowing economy youre describing almost the situation the opec nations are faced with. Producing a pumping and producing a lot, great news if youre an american, maybe not great news if youre a person reliant on Energy Prices i know we have a growing energy we have a growing Energy Sector in this country, were producing 12 Million Barrels a day. Our economy is still twothirds of the consumer though to the extent of the consumer can spend and feel great about getting a 30 or 40 tank fillup, it helps that. Thats why the United States is to a degree in my view a real island of prosperity here for the time being these results are just so mediocre, no reason why, it is the exact reason why energy is less than 5 on the s p 500, not even worth bothering. We got the jobs report today, and the numbers were pretty decent up 160,000 or 162,000, from 164 kathy said 164 yes, 164. Brian sullivan pointed out today if youre looking at the Oil Production jobs, where there has been losses, you expect that to continue. I do. Im actually getting increasingly concerned about a potential rollover in the oil patch in the permian in particular the strain on their years and years and years of losses is finally maybe catching up with them, wall street and financiers seemed to have lost some patience with the sector i think i saw brian put some notable drops in stock prices yesterday in that sector and so im concerned that we definitely plateaued for some time now at u. S. Production levels of 12. 2 Million Barrels it could go in reverse john, thank you for coming in great to see you. Thanks so much. We got a lot more in the next ten minutes. Well get you ready for the final opening bell of what has been a wild week on wall street, what to watch in the markets today and next week when squawk returns right after this it never questions the tasks at hand. But this year, theres a more thrilling path to follow. father kids. Change of plans vo defy the laws of human nature. At the summer of audi sales event get exceptional offers now [woman on pa] introducing togos new hot chicken trio. The new brewpub chicken with grilled chicken, bacon, and fresh avocado. The hot buffalo chicken with franks redhot wings sauce. And the tangy barbecue. The new hot chicken trio at togos. How far would you go for a togo . [woman on pa] this is the defining event of our time and the relationship between china and the United States is going to set, i think, the framework for how we go forward as a world, a World Economy for the next 25, 30, 35, 40 years this is the fundamental reason donald trump is the president of the United States. This is the return of american greatness. This is bringing Manufacturing Base back. It is not easy that was former white house chief strategist steve bannon speaking with us earlier this hour on President Trumps new china tariff threat. Lets get the latest from Kayla Tausche in washington. Hi, kayla. Good morning, joe businesses are awaiting details on exactly how this new round of tariffs would be implemented the office of the u. S. Trade representative tells me there should be a federal register notice published soon that entails exactly how this will be put in place and exactly which items are going to be included from that list that was originally put out back in may i spoke to a Senior Administration official this morning also who said the expectation of how this goes is that goods that arrive on u. S. Shores at on september 1st would be subject to those tariffs. Not goods that leave china on september 1st. But, of course, we await the details. This official also tells me the president is open to potentially delaying or halting the imposition of the tariffs if he feels it is something that china has done in the interim is good enough though this official said when i asked about how china talks went with shanghai earlier this week, this official said the china talks do not go well enough. Here is how the president himself described the decision to put these tariffs on and his relationship with china at a rally in cincinnati last night we have been losing hundreds of billions of dollars a year to china and has to stop. President xi is a good man, a friend of mine, he understands it and until such time as there is a deal we will be taxing the hell out of china. Thats all there is. The white house will surely be hearing from a litany of business organizations, hundreds of them appeared at a hearing or signed petitions for the administration not to put these tariffs in place they range from the Consumer Tech association, chamber of commerce, National Retail federation, all of these consumer facing industries that say our items are on that list, this would hurt jobs and it would raise prices if it goes into effect. Kayla, thank you for that want to talk more about the Market Impact from this new tariff threat as well as next weeks slate of corporate earnings, which may be overshadowed for that, were joined by aaron gibb and jason trainer is here with us. We have all these earnings well be heari ing about next week bu will we be paying attention to them. I think well be looking at what were expecting for the second half. Were already done with three quarters of the earnings season for q2, were over it. No big names are coming out. Disney is one. We have disney, uber and lyft but theyre not moving the market theyre new ipos, ones to watch in the media, but not ones that are going to move the market overall. What were looking at for the u. S. Economy, disney, eventually lowes, names that will be important on what is happening in the overall economy and so for the most part, we have a really good sense of what q2 happened. We have gone from expecting a negative 2 contraction to positive 2 growth for the second half of the year, we have revised estimates down by 2 . And thats before the tariff announcement so, again, could be looking at further revisions down for all your consumer stocks, consumer discretionary, some of your staples as well, and this could be a more before everybody hits the lie this afternoon, sell everything, is that what youre trying to say . Then we have the accommodative fed. Im not saying sell yet, but it could be more volatility just like we have been seeing where we have big upmoves and then just like may, we go down by 15 . And so you can again see this market volatility of up and down, maybe slowly heading towards an upward trend. Were still heading towards better growth. But it is going to slow down and that is something that investors are really aware of. Before you take your half day friday, you already have been up half the day already, what will you do i think it is tough to be short. Clearly are some head winds in terms of earnings by the same token, 184, ten year treasury yield, most likely the fed will ease more, the fed has one of the highest policy rates in the world, the ecb doubles down, it gets it is very tough to be short, almost regardless of what the earnings are the earnings, we were very worried about earnings recession at the start of the year and we clearly had a slowdown in earnings, i dont think you reached the earnings recession i would ask you, do you get that in the second half of the year. We have i cant anser probably not. I would be long in equities. Look at small and midcaps. Thank you thank you, all have a great weekend, everybody. Squawk on the street begins right now. How deep is your love good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber, sara eisen, cramer is off today. Futures red. Jobs number in line, 164 k, revisions weak all three indices could post longest losing streak today since march. Europe and asia catching up to us