Amid a U.S.-China trade war that has taken itself to new heights, White House economic adviser Larry Kudlow didn’t pull any punches when discussing the state of trade negotiations. Kudlow referred to the Chinese economy as one that is “crumbling,” which could put international equities in a world of hurt.

“The Chinese economy is crumbling. It’s just not the powerhouse it was 20 years ago,” Kudlow said on CNBC’s “Squawk on the Street.”

“Their GDP, which is probably inflated by several points, is coming in lower and lower,” Kudlow added.

The Dow Jones Industrial Average took a 767-point hit during Monday’s market session, but Kudlow said it’s not representative of how strong the U.S. economy is compared to China.

“I think China is getting hurt significantly, much more than we are,” Kudlow said.

In the meantime, labor data is fueling moves in U.S. equities. Last week, the Labor Department revealed that 164,000 jobs were added during the month of July while the unemployment rate was static at 3.7 percent–this represents a drop of about 61,000 or about 27 percent from June.

The rise of 164,000 during the month fell 1,000 below the 165,000 Dow Jones forecast and also matched the average monthly gain for the year. Last year, the economy created 223,000 jobs on a monthly basis.

Data also showed that wages continue to climb, with a 3.2% year-over-year gain that bested expectations by one-tenth of a percentage point. Average weekly hours moved lower to 34.3.

For the markets hoping that future rate cuts could be on the way, Federal Reserve Chairman Jerome Powell dashed their hopes by saying it wasn’t the trend, but merely a “mid-cycle adjustment.”

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The markets may have already priced in a rate cut, leading to sell-offs following news of the cut. Additionally, the cut acknowledges that the central bank is aware of the looming risks in the economy.

For investors sensing continued upside in U.S. equities over international equities, the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI) offers them the ability to benefit not only from domestic U.S. markets potentially performing well, but from their outperformance compared to international markets. For investors looking to play the international equities over U.S. equities angle, the Direxion FTSE International Over US ETF (NYSEArca: RWIU) gives investors the opportunity to capitalize on this hunch.

The news of the rate cut came after the U.S. economy added 170,000 nonfarm payrolls and the unemployment rate currently stands at a low 3.7 percent. The Commerce Department recently reported that Gross domestic product (GDP) fell during the second quarter to 2.1 percent, but still bested Wall Street analysts who were expecting a larger decline. GDP fell from 3.1 percent in the first quarter, which represents the weakest increase since the first quarter of 2017.

The central bank cited “implications of global developments for the economic outlook as well as muted inflation pressures.” The Fed also said it would “act as appropriate to sustain the expansion,” which meant that future rate cuts could take place.

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