Of one of the worlds biggest banks leaving after less than two years on the job it is a busy monday, august 5th, 2019 Worldwide Exchange begins right now. Good morning good afternoon good evening welcome from wherever you are watching i am brian sullivan. We have breaking news with regard to chinas currency it is sinking in a big way the chinese yuan traded offshore is now sliding below 7 to the u. S. Dollar. That is a threshold thats not been breached in more than a decade tough go to 2008 and the financial crisis now, as that currency falls, remember, what does it do . It makes chinese exports less expensi expensive, which some say could mitigate any positive impact from the u. S. Tariffs. Analysts are quick to note, china could retaliate more against President Trumps tariffs by further devaluing the currency you can see where it is 7. 08 this is a fouryear chart. Remember, it is inverted as that goes up, thats the dollar against chinas currency. Thats a weakening of china. Look at this we were at 6 and change here four years ago as that trade fight has increased, weve seen chinas currency weaken. We have not seen that level in more than a decade the currency war and hong kong protests are happening across the pacific ocean, but youll feel it here. As this happens, dow futures are down more than 300 points right now. Of course, all this as our major averages are coming off their worst week of the year dow pfutures down 366 nasdaq and s p also lower on a percentage basis as stocks slides, bonds keep getting bought people are looking for safety anywhere they can find it. The benchmark 10year yield, wow, 1. 75 by the way, 2year yield, 1. 6 you have to watch these spreads. Watch this and watch this. If they invert, thats that inverted yield curve we talk about, which has preceded many recessions still, yields very, very low as all this happens, as you might imagine, stocks in asia, they are selling off, as well. You have japan down nearly 2 . Shanghai, 1. 5 the hang seng being rocked by protests, down nearly 3 right now. Europe, theyre losing the same. Similar story, a lot of red on the screen across the board. Look at that, france down 2 germany down 1. 5 . The uk down more than 2 , as well outside of stocks, heres a look at Global Commodities and currencies oil is also down in global slowdown fears if the Global Economy slows down, Oil Production remains high, you have too much of the stuff, it is down 1. 5 right now. Euro dla euro dollar to 1. 11. Gold continues to be bought. Bitcoin, the mover of the day, up nearly 7 to 11,700 thats more than a 700 move in bitcoin. Lets now get more on this heightened tension in trade and the big currency moves we go live to beijing, where there is no shortage of news to discuss. Reporter thanks so much, brian. The chinese yuan has weakened past the psychologically important 7 mark, as chinese currency traders say, it has cracked 7. Thats been raising questions here as to whether or not beijing policymakers are pur purposefully devaluing the currency to counter President Trumps latest round of tariffs. We know the Chinese Government controls the currency very carefully. In a statement on its website today, the peoples bank of china didnt mention the u. S. By name but explicitly linked the depreciation to the trade war, saying losses were due to unilateralism, trade protectioni protectionism, and tariffs on chinese goods. For the past decades, authorities have been keeping the currency above the 7 level now, we are hearing the signal that the authorities here are willing to tolerate a much weaker currency. Thats been received well by the manufacturers here many of them have been telling us for the past couple days theyve been very concerned about the impact of the 10 tariff on 300 billion worth of goods. As one manufacturer said to me, theres nowhere to hide. The cheaper currency, as brian was talking about, means that it is going to be beneficial and advantageous for chinese exporters. Now, there also could be a backlash from the white house. The signal could also be received there that beijing is willing to give up on the trade talks all together, which are supposed to take place in the u. S. In september. Or potentially that theyre seeing this as a move that beijing would want to weapon iz. The central bank expressed confidence the yuan would remain stable and there would be no policy change. There is capital flight with this latest reaction the public reaction has been interesting. People are talking about it nonstop on social media, this is the top one of the top trending topics with 350 million comments and views. Wow. Reporter a lot of them are concern. Yeah, the authorities here wont be able to control the currency. That they wont be able to protect, you know, a currency that a lot of people here see as important to their bottom line is the fear that people are going to continue to put their millions and billions of dollars out of china into the u. S. Or other locations . Reporter yup, thats right weve seen this story before back in 2015 2016, after a depreciation, a lot of people here gt scaot scared about what would mean people started moving their money offshore, and that became a major headache for pay jing policymakers theyve been the policymakers have been very careful to put in more restrictions over the past couple years, to make sure that doesnt happen again its difficult to tell whether or not the authorities would be able to keep it totally under control. Wow chinese leaders talk a tough game looks like the Chinese Consumer may be betting with his or her wallet and sending capital outside ede the country thank you. Will this trade fight turn into an all out currency war lets welcome in the senior economist from capital economics. Julian, do you believe china has weaponized its currency . I think it knew what the reaction would be in doing this, in terms of the headlines, in terms of the way itll antagonize the Trump Administration yet its done it anyway. Its explicitly linked the move to the recent escalation in trade tensions and additional u. S. Tariffs i think it is effectively weaponizing it, even if it sunt intervening to push the currently down, but by linking it to the trade tensions and timing the move so soon after the tariff threats i do think we are moving in that direction. Do you believe the Chinese Government has expressly allowed that offshore currency to go below 71 to the u. S. Dollar in years past, theyve defended that level, julian. Well, i think it is clearly intentional. We havent seen any effort since this morning to push the Exchange Rate back down below 7. We know they have the ability to do so, directly through deploying effects reserves or through the state bank the fact we havent seen any drop back, and actually its remained at that level, just above 7, suggests that this was an intentional step upwards. Where does it go . How low does the chinese currency fall . So i think the goal here is clearly to offset some of the drag from u. S. Tariffs otherwise, they wouldnt take the risk of breaching 7 in terms of capital flight in terms of what it means for the trade negotiations theyll want to see it weaken further, in my view, in order to get more of that offset. We now think it could end this year around 7. 3 against the dollar, maybe 7. 5 by the end of next year. Wow do you believe i mean, the other side of this, obviously theres two sides, right, to the currency story number one is, it is going to make their imports into the United States, and the rest of the world, less expensive. To your point, maybe semimitigating the tariffs. It also has the effect of making imports into china, maybe from the u. S. Or other locations, more expensive how does this play out, julian wilell, i thinks the positive for china. They import less than they export when you adjust for the higher cost of imports, i think it will be a positive. Even if exporters dont adjust the u. S. Dollar export prices, their export revenues will still pen fi benefit. A 10 devaluation could increase gdp by 0. 2 , enough to offset a tariff. Will this set off a global currency war will the euro have to go down . Will the United States have to act . Well, i think at this stage, this is not clear. I mean, at the moment, what weve seen is actually in the big scheme of things, a fairly small move i think we will, in the coming days and weeks, see intervention in order to prevent the currency from weakening too quickly i dont think well see a very major devaluation. Were predicting a 5 , 10 decline over the coming quarters i think that wouldnt cause significant problems for other countries. If things do go beyond that, it could descend into a broader currency conflict. Julian evanspritchard, thank you for joining us the other developing story out of china is we are seeing more chaos in hong kong amid protests and a general strike. More than 200 flights in and out of hong kong have been cancelled. Much of the city was brought to a standstill beijing leader carrie lam is warning protests are putting hong kong on a path of potential no return. The recent protests and marches have seen escalated violence, and these worrying acts have gone beyond the fugitive offenders bill. Particularly when i have already announced some time ago that the bill is dead such extensive disruptions in the name of certain demands or uncooperative movement have seriously undermined hong kongs law and order. And are pushing our city, the city we all love, and many of us helped to build, to the verge of a very dangerous situation well have more on this developing story, including a live report from hong kong, in just a bit so much more to do on this busy monday when we come back. Pressure on powell is President Trump forcing the feds hand with those new tariffs . How does the fed react that debate ahead. Plus, the ceo of one of europes biggest banks out after just 18 months on the job. Futures are down sharply dow futures off 360 points bonds up gold up. Bitcoin up more than 700 big morning developing were back right after this. Welcome back and good morning. 5 15 on a monday it could be a rough day for your stock investments. Dow futures are down 350 points. All this as major averages are coming off the worst week of the year nasdaq and s p are down on an equal percentage basis as well as we see chaos reign in stocks, buyers are flocking to bitcoin as volatility as gone up, were seeing buyers from around the world come into the Digital Currency bitcoin is up 750 points right now, nearly a 7point move to 11,730 as our bonds get bought, were seeing bonds around the world get bought, and yields continue to fall. 14. 5 trillion, with a t, of sovereign debt around the world now has a negative yield nothing stands out as much as that the german bund, you may not care about German Government bonds, maybe it is boring at 5 16 in the morning, but you care because that signals the demand for risk and Risk Appetite has collapsed around the world. People are literally willing to get no return. In fact, the negative return on their money just to have a place to park it the yield on the german bond, one of the most widely traded government debts in the world, down to 1 2 of 1 negative can you imagine if our 10year note was a negative return thats happening right now in germany. On deck, heading for the exit the ceo of one of the worlds biggest banks out after 18 months on the job. 4,000 workers get laid off more on that story ahead. Plus, the situation in hong kong growing worse protests continuing. Nearly 100 people arrested as the head of hong kong calls it a, quote, very dangerous situation. Well get a live report from that city still ahead. Did you know you can save money by using dish soap to clean grease on more than dishes . Using multiple cleaners on grease can be expensive, and sometimes ineffective. For better value, tackle grease with dawn ultra. Dawn is for more than just dishes. It provides 3x more grease cleaning power per drop, which cuts through tough kitchen messes, pretreats laundry stains, and even tackles grease buildup on car rims. Tackle tough greasy messes around your home, and save money with dawn ultra. Brand power. Helping you better. Welcome back 5 20 4 20 there in the city of chicago. Dow coming off the worst weeks of the year last week. The weakness will continue today. There is news outside of china in trade this morning. Here are some of the top stories. Hsbc ousting ceo john flint after 18 months on the job companys chairman says the move is necessary to speed up growth plans including its u. S. Business hsbc telling dow jones it plans to cut thousands of jobs and slow investment spending this comes despite the Bank Reporting a rise in first half profit and a 1 billion stock buyback. Softbanks operating profit rising in the Second Quarter, adding more mobile users theyre maintaining their forecast for the year with growth seen rising 9 . Stock not reacting global weakness down 0. 5 . Berkshire hathaways operating profit fell more than expected in the Second Quarter wa weakness in insurance underwriting and trading woes for buffets economy trading at 306,000 a share. Coming up, are we on the verge of a global currency war china doing something it hasnt in ten years, and it could mitigate the tariffs how does President Trump react what does it mean to your money . Answers to both ahead. Five . One to five . Its more like five million. Theres everything from happy 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. Think you need to pay prestige prices for better skin results . 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It is a tough morning for the country after those two Mass Shootings in el paso and dayton claim the lives of 29 people in 13 hours two cities, 1600 miles apart, both grieving. In el paso, a shooting opened fire near a crowd walmart. 20 people were killed and 26 others injured mes of the fami most of the families were back to School Shopping and had to dive for cover the rampage started in the parking lot with the gunman shooting his way into the store. The shooter, patrick crusius, surrendered on murder charges. A similar scene in dayton, ohio. It happened outside a popular bar in the oregon district the shooter walking up in an alley and firing dozens of rounds into a crowded street nine people were killed and 27 others injured Authorities SayPolice Fatally shot the gunman within 30 seconds of firing his first bullets. President trump is expected to make a statement about the shootings at 10 00 a. M. Eastern. The president spoke briefly sunday, extending his condolences to those impacted, and praising Law Enforcement for its quick actions. Those are the headlines this morning, brian we send it back to you. Frances, thank you very much. Coming up, trade turmoil heating up chinas currency collapsing right now as reports say china will slow its buying of u. S. Farm goods with trump and xi jinping dug in, how do the sides out to solve this trade crisis . Well talk about that coming up on Worldwide Exchange. Did you know you can save money by using dish soap to clean grease on more than dishes . Using multiple cleaners on grease can be expensive, and sometimes ineffective. For better value, tackle grease with dawn ultra. Dawn is for more than just dishes. It provides 3x more grease cleaning power per drop, which cuts through tough kitchen messes, pretreats laundry stains, and even tackles grease buildup on car rims. Tackle tough greasy messes around your home, and save money with dawn ultra. Brand power. Helping you better. Breaking news. U. S. china trade war hitting a new level. Chinas goods are cheaper and our goods sold into china even more expensive with the yuan down stock futures over 300 bond yields falling again. How does President Trump react it is monday, august 5th, and youre watching worldwidecnbc welcome back good morning i am brian sullivan. Theres a lot of red on the skre screen ill give you an upside. Dow futures, halfway through the 5 00 a. M. , theyre down 300 points the upside is we were down 350 about 20 minutes ago weve actually seen them pull back a bit still not going to sugar coat this, as you can see, s p and nasdaq futures, they are all down as well this morning. This coming off the worst week of the year for the u. S. Market averages already the weakness we had on friday continuing today the big driver this morning is chinas currency it is collapsing the chinese currency, the offshore yuan, falli ining p ii to the u. S. Dollar this is a fouryear inverted chart. When the green line goes up, that means chinas currency is weakening. Thats the u. S. Dollar we go back four years, we were at 6 and change four years ago a lot of moves here. As you can see, the trade war kicking off right about here the chinese currency continues to weaken. Now, this 71 level, why do you care it is a big round n