In europe and japan, Government Bonds pay no interest at all. In fact, when you buy a Government Bond there, you dont even get all your money back. Never in Human History has the lender paid the borrower. Rates are tumbling. This amounts to a worldwide race to the bottom in Interest Rates. Where it leads, i dont know. But its now very likely that our Federal Reserve will drop rates aggressively from here on out, simply to keep pace with everyone else. If they dont, the u. S. Dollar will keep going up, keep disrupting our trade and our economy. I thought that with all this free money flooding into the world, that a lot of it would go into the stock market, our stock market. That is not the case, at least not right now. The dow will open with a big drop, over 250 points to the downside and there will be losses on the s p and nasdaq as well. Other markets are convulsed by it all. Look at gold. Theres a rush to the safety, what they think of as the safety of gold. Its back above 1500 an ounce, up 25 bucks an ounce as we speak. And look at oil. 52 a barrel. Even though iran is threatening the mother of all wars, if we dont remove sanctions. 52. 31. What a day. Follow your money here. Its going to be a big, wild day. Varney company is about to begin. Stuart President Trumps getting in on the action, tweeting this on rates moments ago. Three more Central Banks cut rates. Our problem is not china. We are stronger than ever. Money is pouring into the u. S. While china is losing companies by the thousands to other countries, and their currency is under siege. Our problem is a Federal Reserve that is too proud to admit their mistake of acting too fast and tightening too much, and that i was right. They must cut rates bigger and faster and stop their ridiculous quantitative tightening now. Yield curve is at too wide a margin and no inflation. Incompetence is a terrible thing to watch, especially when things can be taken care of so easily. We will win anyway but it would be much easier if the fed understood, which they dont, that we are competing against other countries all of whom want to do well at our expense. There you have it. Futures, look at it now, down some more. Down 270, down 81 on the nasdaq. Weve got to check that tenyear treasury again for you because it moves all the time. Right now we are at 1. 63 . Keith fitz, come on in. It looks to me like its a race to the bottom. What are the implications of that . Well, the implications are that they are playing with occams razor. I think the president is correct, the fed has screwed up. To their favor, this is good and they are trying to get ahead of it but where it goes, i dont know. I think we could see 1 . Stuart do you have a sense that we are in a financial crisis . Not yet but i think the fed doing this strongly tips the scales in that thing. The problem weve got in this country is we are predicated on spending. When the rest of the world is predicated on savings. Its been a tough road to hoe for many, many years. It is not going to be an overnight fix and certainly doing this is not going to aid that. Stuart hold on a second. Liz peek with us this morning. You heard what President Trump tweeted, very critical of the Federal Reserve. What do you make of this . I think he was right. Last year, seven rate hikes really did not do us any good and in fact, caused the economy and the stock market to get into a bit of trouble at the end of last year. I think they are behind the curve and the curve is being set by overseas forces. I think thats what the fed missed last year. They missed the slowdown globally. I think its what theyve missed this year, too. This race to the bottom in terms of Interest Rates is extraordinary. There are 12 trillion of debt instruments out there yielding negative returns. Not since 2016, the brexit vote which threw markets into tumult have we seen anything like this. I think theres a lost t of uncertainty. I think china is part of it. The Federal Reserve cant correct it overnight but they have to keep in step. Stuart any idea why this is happening, why this race to the bottom of Interest Rates . Is there some kind of fear its a global recession and its trying to do something about it . It is clearly that. We have seen a slowdown in important european economies, germany most particularly, china obviously is slowing. But basically, Central Banks around the world have signaled for months that they were going to be easing and they are doing it i think a little more aggressively than anyone anticipated because the data looks pretty weak. I think as far as the stock market, the reason investors are saying oh, my gosh, sell stocks, is because they dont know what this means. Theyre sitting there just like we are saying whoa, why is this happening. Stuart what are the implications. Absolutely. Stuart one point i would raise with you, keith, you have this free money all over the place because some economies are slowing dramatically but it doesnt work. So far, free money has not worked. Well, this is a lesson we learned the hard way in japan in the 90s and early 2000s. You cant give money away if people dont want it in the first place, no matter what the rate. Stuart okay. Keith, stay there, please. I have a couple more questions later. Ive got to, you know, while we in the top of the show, give viewers the sense of importance of the Financial Moves were seeing and politics. Moments from now, President Trump leaves the white house to visit the scenes of the deadly weekend shootings. He will maybe speak to reporters before he departs. If he does, you will see it. Back to liz peek because i want to talk to you about politics. The president going to el paso, dayton first, then el paso, walking into a mine field. He clearly is because hes being blamed in essence for the el paso shootings. The new narrative on the left is that President Trump is a racist, hes encouraged racism and hes responsible for any antiimmigrant, antipeople of color activity that takes place in this country. It is so unfair. His stance against illegal immigration is exactly what barack obama talked about several years ago, bill clinton, chuck schumer, everyone up until today literally or at least the last six months has opposed our open borders. Now because the president has stood firm about not wanting tens of thousands of people to cross our border illegally, now hes a racist. This narrative is very dangerous. People are trying to scare americans and people who are in the country legally and illegally into thinking that their lives are in danger. The New York Times, i want to just call this out, ran a piece likening white nationalists in the country, of which there are some, not enormous number, to the rise of isis. This was literally a story they ran two days ago. It is so offensive to me to even pretend that theres any likeness between those two things. Look, this all started with charlottesville. The left has created what i consider to be a false narrative about our president but by the way, should he go to el paso, of course he should go. Hes the president of the country. Stuart hes the comforter in chief. Absolutely. Ive got to deal with the main Corporate News story of the day which is disney. Earnings came out yesterday. Im not so sure i really care about their profit and loss. I care about what they said about their new streaming service in the future. Keith, come back in again. What did disney say about streaming . Heres the thing. Disney said we are willing to take a shortterm hit because we think the potential is so extreme going forward. This is a classic case of we are going to invest now, future growth is out there with regard to hulu plus, disney plus. I think they are on the right track but i do think its dicey given the overall tenor of the market. Stuart down seven bucks in the early going. Would you buy it . On a short leash, yes, i would. Because i buy off on the narrative. I think earnings double if my back of the envelope calculations are right within the next three years. Stuart keith, thanks very much. Some individual stocks we are following for you. Big story is Interest Rates on the overall market. But look at cvs. Nice forecast, rosy forecast. The stock is up 5 . Office depot, yeah, they lost money but here comes the expectations again. Not as much as expected. Premarket, office depot is up 19 cents. Papa johns, pizza people, have returned to making money. Not sure thats a correct quote but i believe papa johns will open a little bit higher. Unchanged right now. Back to the futures. Important story. We are down 280 points as we speak. Thats on the dow. 83 points on the nasdaq. Looks like 1 plus. Losses all across the board. The tenyear treasury yield all over the place today, mostly down ashley 1. 625 . It changes constantly. Stuart got it. Whoa. What a story. Next case, the democrats cant let it go. House judiciary chair nadler says impeachment proceedings could begin in october and hes going after emails from Justice Brett kavanaugh that date back more than a decade. President trump going after the Drug Companies to lower prices. Next, we have the ceo of a vast, huge drug company, astrazeneca. They make wellknown drugs. Are they worried about the president s plans . What are they going to do about plunging Interest Rates in europe . We will ask him. We are waiting for President Trumps departure. Hes expected to talk to reporters. You will hear what hes got to say if he speaks. Varney company just getting started. Stuart look at this. Now were down over 300 points for the dow, down nearly 100 for the nasdaq. This is why. The yield on the tenyear treasury is absolutely tumbling. In fact, bond yields are tumbling worldwide. 1. 62 on the tenyear, u. S. Tenyear, as of now. Havent been this low for a long, long time. It reminds me of 20072008. Frankly, it does. Breaking this morning. Fed ex ending its ground delivery deal with amazon. Tell me more. Susan this just crossed about half an hour ago. Fed ex says they will end their ground delivery contract with amazon and wont renew it at the end of this month. They also ended their express contract which covered air shipping back in june. What they are doing is shifting away from amazon. Other players like walmart, target and the rest are trying to get to oneday shipping, twoday shipping, so fed ex says if amazon is developing its own delivery service, we will move on and try to service the other players. Both down 1 . Stuart you have a whopping big decline overall anyway. Lets look at astrazeneca. Major drug maker. They make popular drugs like crestor, nexium and a whole lot more. The stock is down just a fraction this morning. Pascal soriot, the ceo, is with us now. Sir, i have to start with this. You are a european country. What are you going to do about these plunging Interest Rates, negative yields all across europe and japan . How does that fit into your Business Plan . Actually, you know, we are used to adjusting to those changes. The currencies against the u. S. Dollar have declined across the entire world. We are a u. S. Dollar denominated company so of course its impacting us. We would rather not be impacted this way. Stuart does this really trouble you . Because i dont think we have ever seen anything quite like this before. Are you troubled about this . No. I mean, we are basically adjusting. Again, you know, i would hope that this would be resolved but we are adjusting, we are a company used to those changes. We are global so we are very global in nature. We have ups and downs. Stuart i have to ask you about china. Your sales there, up 44 in the second quarter. You sold more than 1 billion worth in china in 13 weeks. Do you think china will continue to be a big strong market for you in the future . Certainly. China, as we all know, has a tremendous population and very big needs. The country has changed, the country is opening up, the government is clearly wanting china to engage on a global basis, and locally there has been fasttracking innovations, new products and reducing prices just like all the countries around the world are doing. We are very much driving our growth for our new products and believe we can continue growing in china over the next few months and years. Stuart what about the president s plan to lower drug prices . Will you be affected . We may be. Actually, nobody knows what the outcome of the discussions will be. You know, we were disappointed to see reform has been put on hold for the time being. Its a pity because it would enable us to reduce our list prices very very substantially. The package that is going through senate, some aspects are good, some other aspects are not presentable, we believe, but there are good things and the system has to change. We are very supportive of the discussions that are ongoing today in the senate. Stuart we want to thank you very much for being on the program this morning. Just so happens that you are surrounded by something of a financial crisis so we cut it rather short. But i do hope you can come see us again. Pascal soriot, ceo of astrazeneca. Thank you for having me. Stuart sure thing. Big day. Look at futures. Were down very sharply, 290 down for the dow, 90 down for the nasdaq. Whats the yield on the tenyear . Ashley just clicked to 1. 63 . The german bond minus. 6 . Stuart goodness me. Thats the lowest yield ever on a Government Bond, by a long way, actually. Okay. 1. 62 on the verge of 1. 63. Chaos in times square. A large crowd mistakes a backfiring motorcycle for a possible shooting. What a story. Weve got it for you. Chaos. While we are waiting for President Trump to leave for dayton, if he speaks to reporters, and he is, we know that, we will get the tape for you and roll it when it comes in. Back in a moment. Liberty mutual customizes your car insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. carrying up to 50 times its tbody weight. Essly marches on. 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 stuart Financial News dominates today. Look at this. We will be down 250 points, maybe more, maybe less, i dont know, four or five minutes from now when the market opens. We are going down and down significantly. Why . Because of this. Look at it. The yield on the tenyear treasury is now at 1. 62 . I have to stress this. When we all walked in or when we walked out last night at the end of the show, the yield on that tenyear treasury was about 1. 7 . Now its all the way down to 1. 62. Doesnt sound like much but if you know anything about the world of money, that is a monumental decline in the rate on the tenyear treasury and in europe, they are in negative territory. You lend them money, they dont give you any interest at all. In fact, they keep part of what you have lent them. This is a unique situation and its a unique financial situation that we are in right now. Let me change the subject completely just for a moment. Show you what happened in new york last night. Panic in times square. A motorcycle backfired, and look at the crowd. They are all over the place. Ashley it happened around 10 00 on seventh avenue, 46th, in the middle of times square. Backfire, this gives you an idea of the psyche of the country at the moment. Multiple calls to 911, terrified people screaming shooter and running for their lives. Several pedestrians were injured, bruises, lacerations, nothing lifethreatening. It took about 20 minutes before the nypd announced that times square was safe. By the way, at a mall in utah last night, a sign fell, a loud bang in the mall, everybody scattered, frightened, running into stores and hiding. This is the psyche of the country right now. Stuart thats how jumpy we all are. Ashley legitimately so. Stuart of course. Of course we are. Heres something. We have got a number on this. Im surprised to hear it. The United States, the u. S. , collecting billions, billions in tariffs over the past 12 months from china. How much . Susan 63 billion in the year through to june. Think about this. In may you got 5. 3 billion, 4. 8 billion in april, and thats important because thats when tariffs actually went up to 25 from 10 on 200 billion worth of chinese goods so we are on pace right now, it looks like we will bring in about 72 billion at the end of this year. We could get to 100 billion if those tariffs of 10 on 300 billion worth of chinese goods goes into effect on september 1st. Stuart that money was paid by american importers of those products. Thats correct . Susan thats right. U. S. Companies and u. S. Importers pay these tariffs. They decide how much of that price hike goes to the consumers when they hike prices on their goods. Stuart i just wasnt expecting a number as big as 63 billion. Susan this is what trump said. Every tariff they take in in dollars they can reserve to give to farmers in aid. Stuart interesting. He wants to back up the farmers. Got it. We are showing you on the screen various markets which i think are in turmoil this morning. We showed you gold just a moment ago. Its characterized as the key flight to safety. Look at it. 1,510 an ounce, up 25 bucks. 1. 7 . President trump was tweeting about these financial developments earlier this morning and he was hard on the Federal Reserve. Im going to isolate just one part of one of his tweets. Look at this. Talking about the fed, he says they must cut rates bigger and faster, and stop their ridiculous quantitative tightening right now. With rates tumbling all round the world, i dont think the Federal Reserve has much choice. If youve got negative rates in europe, Central Banks in new zealand, india, thailand, all cutting rates, the Federal Reserve has no choice.