S p down 1. 1 , and the russell down 1. 05 . Why . One main reason is china. China devaluing its currency. The dollar strengthening significantly. Oil is down big time, look at that, dollar strength, it takes fewer dollars now to buy a gallon of a barrel of oil at 43. 2, down almost 4 . Brent down almost 3 , gold up just a little bit as you see there about a half percent. Mandy is out but sarah eisen who knows a lot about currencies and china is with us today. Thank goodness youre here. I live for days like this, watching the dow and the impact of china spread across the globe. Bob pisani, anything with any china or Commodity Exposure is getting pummeled. Dow up 240 yesterday, down 240 now. Its a wasted week so far. Put them up, Materials Energy and industrials to the downside. Thats the big losers. Some of the obvious names and their impact from china. We always talk about casinos, wynn 70 of revenues in china, and yum brands 50 of its revenue in china down 5 . Those are the easy ones. Lets talk about ones not so obvious, Big Industrial names 10 revenues or more for dow chemical in china, 3m 10 . General electric almost 10 . Johnson controls 6 or 7 . Theyre also moving on this news as well. And sarah, we talked a lot about luxury stocks, oh, theyre not affected. Well he are. Lvmh, louis i have on it and lloyd hennessey, the stock is down 164. 85 and its now being called into question china being the generator. The eem, the emerging market etm is now stitting near a fiveyea low. The problem is china was a Revenue Growth generator for a lot of the countries and this hes being called into question. The companies now have to turn back here. Pressure here and in europe. Emerging markets are the hot spot. Over to the nasdaq, bertha coombs, the nasdaq had been holding up relatively better than the rest. The big reason why is google bucking the trend today after announcing that google inc. Will now become a subsidiary of alphabet. In terms of point impact today, google shares are adding about 12 points of upside but that is more than being wiped out by apples 20 points to the downside. Apple giving up all of yesterdays gains and then some on its stronger volume than we saw in yesterdays move up. The devaluation of the yewian a headwind for iphone sales, concerns about a china slowdown, also weighing on chinese adrs, online retailer jd com com the worst performer turning negative for the year. One bright spot on a down day the airlines. American airlines saw july traffic up 4. 8 from a year ago and tyler, of course, lower jet fuel means better margins. Back to you. Bertha, thank you very much. News order from the bond market, threeyear notes are up for auction, very interesting day taking shape. Rick santelli tracking the action for us at the cme. What is the demand, rick . Really the demand grade was a b minus so definitely above average. It could have been better but it was a b, b minus. Whats interesting today of course is with equities down and all the attention given to china, you dont do these things when things are coming along just great. It has implications which cause the treasuries to rally pushing down yields, maybe too much of a good thing. Lets go through it. 24 billion threeyear notes at the auction, 1. 013. The bid side was 101. 5 offer to 101, price in the middle. 3. 34, a little better than the auction average, indirects 52. 8, this saved the grade, best since december of 08, direct at 8. 2, a bit on the weak side under the ten auction average of 12. It continues to be watching whats going on with the indirects that may give us the most clues in the future, and of course, when you consider what foreign Central Banks are up to, maybe it makes a whole lot of sense. Tyler, back to you. Thanks. Lets go to dominic chu for a quick market flash. Rackspace cuts revenue guidance for the full year. The Web Hosting Company did post a better than expected increase in their total revenues for the quarter. Rackspace also announced a 1 billion Stock Buyback Program in addition to the 200 million in an already bought back already so again those shares still down by 11 . Back over to you. Dom, thank you very much. Stocks near their session lows following chinas move overnight to devalue the yuan, so how is it going to impact the fed . Weve got cnbc contributors ron and michael far with us. Ron just wrote a piece about the fed and a chance of a september rate hike on pow powerlunch. Cnbc. Com. Welcome to you both. I suppose the argument would be that, to the extent that the chinese devalue their currency and their exports become cheaper, that takes one peg out of domestic inflation, and thats what the fed is watching. And this comes after Stanley Fisher yesterday, who was the first to suggest rates were going up this year said that the fed is looking at inflation being too low. I said weve gone from the greenspan put to the fish net, because he just put a floor on the market yesterday suggesting that you know, look, now unemployment is where we want it, looking at inflation and this china story exacerbates any deflationary tendencies in the Global Economy including our own. I have to unwind myself, its probably less than 50 50 they go in september. Michael, what do you think . I think that theyre so determined they still might but according to their argument of data dependency, i think that rons right. I dont think they can do it. Dr. Jenny bryson out of wells fargo he argues that basically less than 1 of u. S. Gdp is involved with trade with china. We had a 2 currency correction. This is not a really big deal in terms of what it means between the u. S. And china. Its a much bigger deal if it starts to affect owl World Markets and slows those markets and begins to slow our foreign trade. So i think overall yes, the fed should probably sit on the side for a while longer, though sooner or later theyve got to do something. Tyler, whats interesting here is the fed and even mr. Fischer remembered to inflation as transitory for six years. Oil crashing, commodities are down anywhere from 30 to 50 . Sugar is down 50 , copper down at a multiyear low. You see commodities falling like this, its hard to suggest that its headline inflation at the very least will accelerate. Its very difficult in the months ahead to see the numbers go higher ron, to your point i think the treasury market is backing that up. Dramatic fall in the treasury yield, Interest Rates are coming down. Nothing in the commodity prices, basic materials or Interest Rates suggest we have any kind of recovering or expanding economy, or any whiff of inflation anywhere. Let me just raise the idea that back when chairman janet yellen yesterday, there was narrowly a concern elsewhere in the world, i. E. , much more focused on u. S. Data, so that runs counter to the idea that what the chinese would do. Lets look at how the u. S. Changed since she spoke. Employment cost index slowest since 198. Commodities collapsed again. Yields have dropped. As mike was saying in the pipeline or the markets, youre not getting any indicators, you get whiffs of deflation so sure, the fed is focused on domestic issues, but we could import deflation as much as we can import chinese goods and thats becoming a risk. For years, a lot of stock investors and u. S. Investors said were going to tap the chinese growth engine, were going to see the Growth Numbers coming from china, demanding from the Multinational Companies driving the world because the u. S. Was so tepid. The u. S. Is not a more than still tepid at 2 gdp growth god willing but that makes us still a very dim light in a dark forest a dark forest getting a little dak rker. China is japan in 1989. Their economy is going down. I dont care whats going on with their stock market. The dow is down 250 points. Ron, michael, thanks very much. Check out rons story on powerlunch. Cnbc. Com. The big surprise from china today devaluing its currency by almost 2 . Its the biggest single day chinese devaluation in 21 years. You can really see the impact on the dollar chart against the chinese currency. Were going to bring in alan ruskin of g10 formal strategies at deutsche bank, knows the market inside out. Is this china sparking a new round of the currency war . If china was really getting into this, this would be a big bazooka but you have a situation chinas devalued by a meager 2 . Keep in mind that the biggest ever. But its real trade weighted index relative to the tenyear average, stronger than any other currency out there. Its doing a small touchup. What about the signal . The signal does suggest they worry that the chinese economy is slowing and they are worried about policy traction, they dont have the instruments other than the exchange right now to give the economy a lift so thats problematic. So this was a oneway bet for a lot of hedge funds, for a lot of folks in the Foreign Exchange market that china market would strengthen and strengthen over time. As far as the Hedge Fund Community is concerned, im not sure about the china trade. There was domestic carry trade people effectively buying the yuan currency buying through the dollar. That i think is going to be squeezed but right now actually the Hedge Fund Community is betting the other way in this direction for a weaker currency. Everyone hates emerging market currencies and commodity currencies. The only currency to buy is the u. S. Dollar. Why isnt it stronger . Why havent we gotten to parity yet . Its keeping a lot of the g3 or g4 currencies on the other side. Lot of people are looking to the u. S. Dollar and looking to the euro to some extent as a potential safety play. Keep in mind europe has a large account surface countries in this environment may do better. Buy the euro, is that your tip . I would still say sell the euro but not right now. Its a little bit sideways right now. Dont like the dollar. Thank you, happy birthday alan ruskin the head of g10 Foreign Exchange at deutsche bank. Much more on todays big s l sello selloff. The dow down 255 points, steepening there. Look at west texas down 4 . The s p down 1. 3 . Oil sharply getting near those fivemonth lows. China hurting u. S. Stocks today as weve been talking about. Its economy clearly slowing, beijing clearly concerned, so is now a bad time to be building cars to sell in china . Thats what mercedes is doing, building them right here in the u. S. Where is phil lebeau, on the shop floor. Hi, phil. Hi, tyler. They are actually expanding production of vehicles that will be going over to china. These suvs behind me are coming off the old hummer line here and they will be shipped to china. Interesting time to be sending vehicles over to china. Well look at the Business Model that mercedes is employeeing, when power lunch returns. Llo. I am a fully automated Investment Advisory service. I can help you choose investments. Monitor them. And rebalance your portfolio. I can do a lot of what humans can. Except have a real conversation. If youd like that, you can always speak to someone at schwab. They arent algorithms. Try not to hold it against them. Say hello at intelligent. Schwab. Com my name is jamir dixon and im a locafor pg e. Rk fieldman most people in the community recognize the blue trucks as pg e. My truck is something new. Its an 811 truck. When you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you dont hit them when youre digging. 811 is a free service. Im passionate about it because every time i go on the street i think about my own kids. Theyre the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then ill drive it every day of the week. Together, were building a better california. Welcome back to link. We want to call your attention to whats happening with the broader u. S. Stock market. Were very much in the red, negative day to day but the Dow Jones Industrial average sitting near its worst levels today, down by about 250 points. The s p 500 down by about 26 as well. We are at the weakest levels so far today, not helping the cause again. Apple feeling the pain from that ratings cut at jeffries yesterday, the stock to 130 bucks a share from 135, citing uncertain demand for the iphone and a loss of Investor Confidence and companys ability to grow. Nonetheless, sarah, when it comes to the dow, its shading about 36, 37 points off the blue chip index, so far by far the biggest drag on the dow today. Apple shares, sarah back over to you. Thank you. Some other headlines, drugstore chain rite aid will begin accepting mobile payments such as apple pay, Google Wallet and android beginning august 15th. Symantec selling Information Management business to an Investment Group led by Carlisle Group for about 6 billion in cash and amazon samestore sales hitting 30. 1 in july, up from 26 in june, and driven by amazons black friday, otherwise known tyler as prime day. Thank you very much. Sarah, mercedes reopening an old hummer plant in indiana to build trucks and suvs and sell them in china and at that plant is where phil lebeau is right now. China the auto sales there at a one and a half year low. Why now . Phil . Looks like weve lost phil there. Lets while they try to reestablish phil the story is this old plant that used to make hummers now out of business, being used now to build the r class sedan mid range suv to send over there. Markets near their lows of the day, the nasdaq off about 80 points. The s p down about 26 and the dow off about 250. Two big reasons for it, china and oil. Lets look at some of the biggest drags on the dow, companies with exposure to china, apple, caterpillar, chevron and exxon. Much more on the big market day when power lunch returns on cnbc, first in business worldwide kpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Approaching medicare eligibility . You may think you can put off checking out your Medicare Options until youre sixtyfive, but now is a good time to get the ball rolling. Keep in mind, medicare only covers about eighty percent of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement insurance plans insured by Unitedhealthcare Insurance Company come in. Like all standardized Medicare Supplement insurance plans, they could help pay some of what medicare doesnt, saving you in outofpocket medical costs. Youve learned that taking informed steps along the way really makes a difference later. Thats what it means to go long™. Call now and request this free [decision guide]. Its full of information on medicare and the range of aarp Medicare Supplement plans to choose from based on your needs and budget. All plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. Unitedhealthcare Insurance Company has over thirty Years Experience and the commitment to roll along with you, keeping you on course. So call now and discover how an aarp Medicare Supplement plan could go long™ for you. These are the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. Remember, medicare doesnt cover everything. The rest is up to you. Call now, request your free [decision guide] and start gathering the information you need to help you keep rolling with confidence. Go long™. This is run which a. M. General, used to build the hummer here, never went out of business but the hummer went away obviously when gm went to restructuring. Now theyre building another suv out here, they have contracted pi mercedesbenz to build an r class. China auto sales the july numbers came out overnight down 6. 6 , worst sales in a year and a half for three of the last four months we have seen negative sales in china and by the way, yeartodate, sales are only fractionally higher. Still, mercedes is going to be shipping the r class over to china, this is the only market where it is sold. They sell it in china and nowhere else around the world. Its fairly popular over there. Mercedes signed a threeyear contract with a. M. General to have them build it and ship it over there because they believe theyve got to free up their capacity at their main facility in alabama, where they do all of their suvs, by doing this, this allows them to free up some capacity. Were seeing this with a number of automakers, theyre running up against the ceiling in terms of how much wiggle room they have on the assembly line. Look at how production has grown steadily since 2011. Ed to hit a High Water Mark in 2019 of 12. 3 million. As you look at shares of the major automakers, the importance of china could not be overstated, not just for General Motors and for volkswagen, who are number one and two, depending on how you count the vehicles in china, but also for mercedes which does huge business in china, especially in the suv market, thats why theyve contracted with a. M. General to build the r class. It will be interesting to see what happens over the next couple of months, if it sales continue to slow in china. Well watch the stocks for reaction, interesting story. Thank you, phil lebeau. Speaking of ch