if the president wants to devalue the dollar and not make us the reserve currency, we are going to have a lot of other costs to pay, and there are going to be much higher interest rates on that debt that we have got out there, which is now skyrocketing. what do you make of this weakness in the manufacturing number? i think it s a continuation surprising with the gm strike playing out it is a continuation of global weakness that we are seeing and a residual of the uncertainty on trade and the trade wars we are already in. diane, good to talk to you as always. she is the chief economist at grant thornton. markets are are in the process of having a very rough day. the dow is evening out a little bit but it s down 254 points now, nine-tenths of a percent. this is on a combination of this manufacturing weakness of the absence of a drad deal with china, and more concerns about the economy in general. that wraps up the hour for me.
job numbers a good number. manufacturing number, the first time since 2009, indicated, a contraction, that s based on the institute of supply management survey. service sector as well growing at the weakest point in three years. is that an indication to you that the trade war is weighing on the economy? no, not at all. it is an indication to me that the federal reserve policy with the overvalued dollar is hurting our exports. and we know that we know that hang on. we know that from the data. the data, exports were down two-thirds of a point. on the ism, i love that indicator, but there is a better one now, a more modern one, the market pmi, basically it measures more domestic manufacturing and it was above 50. bottom line, it is like 3.5% unemployment, the mi is hitting on all cylinder, there s going to be some months where manufacturing is lower than others. construction was strong. transportation was strong. which is encouraging. because that s a leading
that. it doesn t mean that the fed chief won t take action in september, it just means at this meeting, there s no decision on interest rates. the fed still has to factor in a lot of data before that september meeting, whether it s the jobs numbers, whether it s gdp, which is going to be coming out as well, and whether it s a manufacturing number. one thing to keep in mind, we are getting some indications of cracks in the economy as well. just this week we learned that manufacturing reports show that manufacturing is contracting for the first time in a decade. so ironically, the president may get his wish that the economy still shows these cracks if the trade war continues to heat up, he may in fact get his rate cut in september. he may get his wish, he s just not getting it how and as fast as he would like. alison kosik, appreciate the reporting and important perspective. with me in studio to share their reporting and insights, josh dawsey, julie pace, darren sands
the market don t always love when people are earning higher wages and unemployment is tighter. to me it is more to do with the fed comments. probably tied some to that. i think we had a series of pieces of data coming in that were quite bad. we got a manufacturing number that was one of the worst in 30 years. so people were nervous. are we on the brink of recession. so i think this is a case where getting a strong jobs number made people happy. i think the fact that they asked the fed chair if the president told you to quit would you quit and he said no, i actually think that the market took some comfort in that too. when the chairman of the fed was himself asked if the president tried fire him, would go, he said no. that is sort of something bubbling under the surface the last month or so.
this is the first time china has had to stop trading. what is going on there? chinese stocks slammed overnight. their first trading day of the year slammed because of a factory output number. a manufacturing number in china weaker than people thought, showing for ten months in a row, factory activity in china has been shrinking that. spread around the world quickly. shanghai, the stocks were halted at 7% down. tokyo fell. then they spread to europe, frankfurt down 4%. paris down and london, as well. selling, dumping of stocks around the globe. buying safe havens, like gold and bonds. there is a second factor here. china is the big driver, just like last year. china was a driver all year. china, the driver to start this new year. there is a second factor. saudi arabia and iran, deepening, dangerous tensions between the two countries. boiling into this sort of global unrest, global tensions, and that s keeping stock market investors having them heading for the exits here. it s intere