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Stocks plunge as US-China trade war escalates—Cramer and other experts on what's next

Stocks plunge as China threatens to weaponize its currency—Six experts break down what's next

U.S. markets just had their worst day of the year.

The U.S-China trade war intensified after President Donald Trump accused the Chinese government of currency manipulation as the yuan fell to its lowest level in a decade. Stocks plummeted as a result.

The Dow Jones Industrial Average plunged more than 700 points, while the S&P 500 fell nearly 3%. With tensions on the rise, experts are unclear on what comes next amid the turmoil and uncertainty.

Here's what six of them, including CNBC's Jim Cramer, are watching now.

"Mad Money" host Jim Cramer took Trump's move as a strategy meant to keep the United States' upper hand:

"Here's the plan as I understand it: they want to take all the tariffs up, and then they can cut them. … They don't want to be in a situation where they have to keep raising and raising. They want to get to where they are, and then they'll hold out: 'Look, we're going to keep these tariffs up. American companies are going to continue to leave China. You can do whatever you want with your currency. It'll give us a break. There'll be big capital outflows.' Now, it is amazing … that the market, frankly, isn't down more. … There are a lot of people who feel that once you get into a currency war, there's going to be lots of different repercussions. I don't think that's the case. I really don't want the U.S. to be devaluing the dollar. That would be a very bad signal to Europe."

Chris Verrone, partner and head of technical analysis at Strategas Research, believed the market response was "corrective":

"We're off 4% from the highs. This is a modest pullback thus far for a market that's up 17[%] year to date. I think we're about halfway there — 2,790, 2,800 is down 6 or 7% from the highs. That's a good shake out. ... I want to watch for the tactical indicators that tend to show up near market lows: spikes in put calls, spikes in one-month lows. We're not quite there yet on that stuff. We have about six-eight weeks of seasonality that's working against us here as well as we look into the future. So, I think we've got to hang in here for a couple of months, but I think this is corrective. I don't think this is a change in trend."

Jonathan Golub, chief U.S. equity strategist at Credit Suisse, said he doesn't know what President Trump will do next, but is looking at the 10-year Treasury yield for guidance on the bigger picture:

"This is a spasm. You went from a couple of days ago with a VIX [Cboe Volatility Index] of 12 — it's ... 21, the last time I looked at the tape. … I'm looking at the 10-year more than anything else. When the 10-year [yield] is well below 2[%], it's really signaling something bigger than this. And if you saw these moves, these were beginning even before this. ... The cyclical data on a global basis is weak. You talk about the ISM [Institute for Supply Management] number, which isn't as bad as it could be. But, if you looked in Europe and in China, is this a bigger problem? And — this one I don't really know — does this embolden the president to push harder in China because this is a signal that they're feeling a lot of pain, or is this their counterpunch? It's really hard to know."

Mark Vitner, senior economist at Wells Fargo, says looking at job growth is a good way to measure the impact of the trade war:

"I think that the big risk is for large companies in that they're likely to further put off major capital expenditures, and that's been one part of the economy that has been weak. They may put off some hiring decisions. I mean, we really haven't seen that yet. We've lost a little bit of momentum in job growth, but it's still pretty solid. But that would be one place to look. And you look at the ISM index, and that kind of goes to the previous conversation where some of this loss of momentum was already in place. And, you know, that was a softer number. The headline number was softer. We've seen the new orders come off in recent months. And so we do seem to be losing momentum. This would further that. And that's really the question, is how much more does this further that? We have our own survey of small businesses, and most small businesses say that this trade war is not really impacting their business, even though they're paying very close attention to it. Two-thirds of them say it hasn't impacted their business at all."

Jeff Moon, president of China Trade Strategies, said President Trump needs to join forces with allies because tariffs and empty praises aren't working:

"When we think about Chinese retaliation, you can separate the methods into passive and active methods. What they've just done is a passive device by not propping up the currency. If you look at the history of China with Korea and Japan, for example, active retaliation gets into much more aggressive anti-foreign activity, which can even escalate into violence. So, there's a long runway that's out there, I think. I think, in addition, Trump really has exceeded his mandate. Nobody in the U.S. voted for us to impose tariffs on every single product that we import from China. He really needs to expand his playbook beyond just tariffs and hollow praises for [Chinese President] Xi Jinping. He needs to really start thinking about joint action with the allies moving forward. This tariff strategy has run its course, or is about to run its course, and we need to get new plays in the playbook."

Brad Bechtel, head of currency strategy at Jefferies, said the trade war is only one part of the many troubles China is facing:

"There's a lot of things going on, right? You have Hong Kong protests, you have [the] Taiwan arms deal, you have [President] Trump constantly on the Twitter feed. And the economy in China, you know, they're trying everything they can to make sure it stays on a growth path above 6%, if they can keep it there. So, they have a lot going on. I think the Hong Kong story is definitely a part of the narrative, and that it's probably part of the reason why they can't go full steam on any sort of currency devaluation, because there's too [many] other factors to pay attention to and the last thing they need is just sudden outflows and worries about their currency. And if you remember last time, in 2015, the global central banking community and the global leadership in the G-20 were very seemingly upset with China's move there because it really destabilized markets, and I think they kind of learned their lesson. So, this way, they did a little subtle move and they can kind of back off on that story, and then sort of keep going behind the scenes with trade negotiations and other things. But, they have a lot to deal with for sure, and it's definitely part of the broader package you're looking at with China right now."