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tv   Cavuto Coast to Coast  FOX Business  August 5, 2019 12:00pm-2:00pm EDT

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up $1300. they arrived as a source of safety? ashley: it is becoming more and more of a viable alternative. a lot of people don't like it but hey. >> goes up when our markets go down. stuart: gold, flight to safety, even bitcoin. neil, it is yours. neil: even bitcoin. thank you very, very much, stuart. let's follow what is going on, stuart. peek at the dow 30. 29 of the 30 were down. it had been all 30 but coca-cola turned up. all 11 s&p 500 sectors that we monitor closely, are down. and some of them down appreciably on fears here, this will extend a while. it was really interesting when i started going inside of the numbers, how far and widespread this is. those of course sensitive to what is going on in china,
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market might dry up on them. semiconductor issues, financial issues, could way on them could expand, global slowdown. get consumer durables involved in that. those sensitive to the economy involved in that. all of sudden, before you know it, katy-bar-the-door. the psychological indicator, the vix, that is flashpoint how people are feeling. that is jumping in excess up 33% earlier. up 23% right now. we're keeping an eye on that as sentiment, what people are feeling about the market. they are feeling a little nervous. numbers out of the services sector slid to a three-year low. the reason i mentioned even the services sector, it at least is following in this report, a fourth straight month, downward trend, still expanding but at a slower rate. that is happening with the manufacturing sector.
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twin sluggishness is weighing on these markets. typically would pounce on negative news, being good for interest rates coming down. that is indeed happening. 10-year note 1.75%. normally that would be a salve to the markets. not much today. the idea maybe this will portend something more substantial, a slowdown the likes of which federal reserve cuts aren't going to be able to handle. jpmorgan jpmorgan in the middle of all this saying you buy own the dip. they're couching that a little bit to say what exactly is a dip, whether you pounce in right away with something like this. always in the eye of the beholder. we're looking at a sluggish start, to put it mildly the start of the third quarter. some say this might have started with the president expanding chinese goods subject to tariffs. the chinese responding very,
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very quickly by devaluing their currency. they're saying we'll not by any agricultural items from the united states. they're not saying that. the word got out to member firms to do just that they don't own up to much there. what is the latest? fox business network's edward lawrence on the latest development. edward? reporter: a lot going on. president donald trump on twitter calling out china as a currency manipulator. officially the treasury department has them on the monitor list. nothing has changed related to that officially but again the president calling them out as a currency manipulator. a spokesman for the central bank governor in china, said the reason it dropped because of trade protectionism and imposition of tariff increases on china. >> translator: at present the overall situation of macroeconomic policy to insure improvement of the stability of the macro economy through
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effective control system. reporter: add this to the reports that chinese government told state-owned companies to stop buying a culture a chinese government official pushed back on the report. they made purchases loaded in september but held off on buying more because the price of american agriculture is 30% higher than other countries. chinese trade sources telling us that during the last face-to-face meeting china refused to put back in the concessions u.s. says china cut out of the trade deal. they told the delegation that china would not change any of their laws to satisfy the united states. there is a move in the beijing to reliance on coupling with the united states. the tone has changed with the trade talks. seems we're inching towards the trade dispute becoming a trade war. neil: thank you my friend.
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we'll go back to edward lawrence at white house. if conditions will warrant. i have feeling on day like this conditions will warrant repeatedly. look where the dow is right now. that is a big point loss. 605 points. in percentage terms 2.25. to put that in some perspective when we had the big drop on october 19th, 1987, a little more than 508 point that represented about a quarter of the dow's value. in this case, 600 plus fall-off 2.25%. that doesn't make it any easier to take. just putting it in perspective. the s&p 500 meanwhile has dropped from 5% from highs reached on the 26th of july. we'll keep track of that. keeping track of countertrends, gold is finding buyers. bitcoin is finding buyers. for a while oil was finding buyers. people are looking for a safe place to keep money in the time being. none more so what is happening within the treasury markets even getting a paltry 1.75 on your
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money, beats getting nothing on your money, or losing money. we'll follow that. jackie deangelis is following sectors all getting hit on the chin. the only differentiator is how hard they are hit. right? reporter: exactly, neil. the dow is close to the session lows we hit earlier this morning. down 605 point right now. this comes back on the news of china retaliation. last round of tariffs by the president, china came back with currency devaluation. the president calling china a currency manipulator in one of his tweets. the dow is a sea of red. coca-cola is slightly in the black but now not green. apple, ibm, intel, were the ones down the most. top losers on a percentage basis. we'll get back to tech in a minute. industrial names, boeing, 3m, caterpillar, they are having a rough day because of china
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concerns as well. the tech stocks you mentioned, chips are getting slammed, techs led the rally. techs highly correlated to china. why names like amd. micron, microchip,a are lower today. all the uncertainty contributing to the wider yield curve conversion, the wideest since 2007. the flight to safety, has the 10-year yield falling even lower than the 3-month short-term yield. with the cut behind us, the market pricing in another one for 100% for the quarter in september. it makes sense. market thinking the fed will be a backstop what could be very volatile august, neil. right now caution investors are coping with uncertainty, figuring out how to reposition.
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you can see why stocks are down. neil: certainly can. jackie deangelis here. get a read on the tariff war that expanded. the president, many say, expanding all the tariffs to $300 billion worth, on september 1, got the ball rolling on this. too soon to say the implications. what happens now, our next guest is concerned, american apparel ceo. what do you think of this and whether that spur ad lot of selloff in activity or at least concern among your members? >> my members are very concerned. i'll tell you, neil what is most interesting, people don't get, $550 billion, you have a you have to do is do the math, divided by number of days, number of hours, comes up to a million dollars a minute coming across into the united states. then you're going to tariff that at 25% or 10%? and you honestly think that the
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consumers is not going to notice? come on. the market is reacting to that. i'm surprised, quite frankly it hasn't reacted with greater ferocity. they're reacting to the fact margins will get squeezed, prices will go up. the idea that, that very idea that the fed will cut and interest rates are going down, it doesn't add up. you put your money in the bank. you will get less money and pay more for goods. the math isn't there. and everybody is starting to realize it. i certainly hope that the president is getting good advice because this -- neil: he is overruling it, we do know that a lot of his closest aides urged against him extending tariffs to the remaining items. he ignored that he also has been saying again and again that consumers are not paying this thanks to japan, i'm sorry,
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china's devaluation, it buffetted effect to american consumers. your argument is, even if that were the case it won't be long, right. >> no. we know for a fact that importers are hiking the bill. they have to, they have to pay for this. they have no choice. because of that they're out there borrowing money to do this, having to lay off people. it is a crazy situation. and we don't see any end in sight. many of our companies are, are public companies. they know that the analysts want to know their exposure to china. so they look around and they say, okay, well, we can go to vietnam, the president has threatened vietnam. we can go to india. the president threatened india. we can go to indonesia, or bangladesh. every place we go we say we can ride it out f we ride it out, we have bigger problems.
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we have to raise prices. we have to raise tariffs. it is an ugly situation. we asked the administration time and time again, please, please, stay away from the consumer. you know on one hand, we're proud of the president for taking this on and saying okay, let's resolve it, but then peter navarro comes out talking about the seven sins of china. it put our industry in five stages of mourning. we can't deal with this we have no way to deal with this. we feel like we're pawns in an international chess game. we're going to get it hurt, it will hurt the economy. it is showing up in the market. we hope that the president will see the light of day and stay away from the consumer because he is heading in our direction. neil: maybe they will score a deal we'll see what happens. rick, thank you very, very much. as rick and i were speaking here the president has been putting out a couple tweets on these development, based on historic
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currency manipulation by china, it is now even more obvious to everyone, americans are not being paid by americans. u.s. is taking tens of billions of dollars. china always used currency manipulation to steal our factories, your our jobs, harm our farmers, not anymore. enter liz peek, fox news consume contributor. what do you think? >> it's a mess. neil: technical terms? >> you have to have phd level to get there look, i think both sides are dug in. i think one question for the trump administration, and to your point, an awful lot of people in that white house want this solved. larry kudlow and mnuchin, all these people are working hard to make sense of this trade skirmish. the problem is, i think china is dug in pretty hard too right now. the hong kong situation cannot come at a worse time because president xi xinping cannot look
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weak there and also weak in dealing with the united states. the united states becomes a very attractive, excuse for what is going on in hong kong. they're using the united states, saying we're fomenting revolution there or fomenting dissent and so, all of a sudden this has become a much bigger conflict i think. look, i think that the trump administration is totally right to go after china. they have cheated for years. i have written about this for years. it is appalling to me that american manufacturers did not stand up, did not demand better treatment from china 20 years ago. but here we are, we are in fact seeing now all this, this skirmishing really begin to deflate our growth and it is not just in manufacturing. it is pretty much across the board. neil: do you think the president, too early to tell, a lot of times worried about the trade spat, something happens, someone blinks, maybe not blinks pivot a little bit, but the latest move to include tariffs
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on these additional items obviously was meant to sort of push the chinese along. it is not working. >> it doesn't seem to be working. they have, in the beginning, six months ago they were making various concessions about agricultural products and allowing different financial companies into china for the first time. the sorts of things gave you hope we were getting somewhere. now the reason i think the market is reacting so badly, okay, there is no sign of progress. in fact it seems like lines have hardened. in may as you know, as your viewers know, everything stopped. they kind of retrenched or backtracked on agreements that seemed to be in place and we have not made any forward progress since then. neil: i don't care where people come politically from the president, that tariffs are a good thing, wonderful thing, that american consumers are not, it is american distributors and a lot of american multinationals
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have the tough time seeing crunched margins, passing some or all of that along. >> yeah. neil: they are the ones affected. china yes, this will be a detriment but the fact of the matter i think he is getting the cart before the horse and giving americans false hope. >> interestingly american businesses are scrambling to diversify, to change their supply chains to get around tariffs as best they cans. frankly i think they have done a pretty bang-up job of that they talk about it in earnings releases. earnings are good. companies are doing very well. neil: they have been able to absorb that. maybe a lot thanks to the currency manipulation to absorb some of that. the idea that american consume remembers immune to this -- >> they're not immune. by the way neither is china immune. china is hurting. neil: isn't in their interest to strike a deal? >> it is in everybody's interest to strike a deal. neil: i wonder if they wait donald trump out? >> that may be their thinking. they may connect the dots
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between trump running on an strong economy, their intransigence leading to less strong economy, increasing odds he is not reelected. i think it is important for him to go into the 2020 election cycle with a strong economy. doesn't have to be growing 3%. probably won't be, certainly will grow 2, 2 1/2%. or else his argument in favor of lower regulations and tax breaks for corporations ring hollow. that is so disappointing. all the things he took office made ceos optimistic. he saw business investment climb. neil: right. >> productivity increased for the first time in a decade. now we're kind of losing. we're losing some momentum. neil: are you surprised with much lower interest rates on 10-year note, 1.75. that might provide and still might provide a floor for stocks but it is not. >> the two things i think this is overreaction to this one piece of news but i think maybe the market was ready for some
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correction anyway. look, this has been a heck of a market year on top of another great year last year. that doesn't always happen without some hiccups along the way. neil: liz, thank you very, very much. we talk about the momentum of american corporations whether they're keeping up with this, to liz's point she aptly pointed out it's a mess. i think she's right. earnings are running 2.7% over last year. that is down from the 6% plus level we were a little more than week ago. expected when all numbers come in, these experts have been wrong, down a little bit, contract a little bit, down half a percent. we're not there yet. that tells but the sentiment and mentality changing as the latest wave of numbers came in to show things are slowing down for latest companies reporting not as robust yet the china situation some of the biggest premier names, caterpillar, deere's, goldman sachs and others have been signaling some
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concerns and you can understand how that panic mentality just sort of steamrolls right through all the other markets. then there is hong kong, this concern china doesn't want to see an 11th weekend in a row of protests. how they dealt with the past weekend is illustrated they're growing impatient. after this. [shouting] $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade. no matter what you trade, at fidelity there's a company that's talked than me: jd power.people 448,134 to be exact. they answered 410 questions in 8 categories about vehicle quality. and when they were done, chevy earned more j.d. power quality awards across cars, trucks and suvs than any other brand
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neil: president trump overruling worried advisors when it came to extend the tariffs as he extended it to remaining $300 billion worth of goods. the advisors were saying we're making progress, this is bad time to do this. secondly the notion the latest wave of goods is more consumer oriented would hit you at retail level, retailers themselves. that is why they
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disproportionately set it off. even those tariffs were on pay for much higher. former bush 43 speechwriter and a former clinton campaign finance member, blake rutherford. thanks forting the time. if that is the case, it is possible that donald trump, maybe with the best of intentions, got this crisis rolling? >> yes. he is planning to campaign on a strong economy and yet this new tariff is going to have exactly the opposite intention what his campaign promise to reduce the trade deficit. it will hit exactly the constituency that supports him. neil: blake, democrats in the race, only one who has spoken out strongly against this approach of president has taken is kamala harris. that is why the federal reserve came to the rescue. sure enough the federal reserve cuts rate. ensuing selloff signaled is not enough. she is worried that donald trump started this and he might rue the day he did.
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>> neil, pretty clear donald trump started it. donald trump has it in his head he can get credit for putting out the fire he started. i don't think that is right. democrats ought to talk about this one of sure prying things we saw in the debates, this didn't get any attention. only time tariffs were mentioned in response to question about tpp i think senator harris is right to be talking about this i think other candidates need to talk about this. this is heartland issue this is affecting american agriculture. if trump pushes forward with new tariffs on consumer goods. it will hit people at retail level, those goods normally buying for a certain price are going to get more expensive. they will feel that in their pocketbooks. democrats ought to emphasize that, that the president is responsible for those price increases. neil: all right, guys, wish we had more time. breaking news going on in hong kong right now where continued protests are planned
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and will be planned through the week and next weekend, it will be the next weekend there. roads blocked, benjamin hall on the protest, why they're accelerating. what is going on? reporter: one of the big concerns, china is may well be losing patience with the protesters and with the government in hong kong. many people are waiting to see whether they take a stronger tact when it comes to putting down this kind of dissent t hasn't put protesters off at all. they showed no signs of stopping, vowing to continue protests and strikes, until first of all carrie lam, the leader resigns and controversial extradition law to china is revoked. police responded this weekend with tear gas as protesters took over a major road outside of a government office. throwing eggs and bricks at building and puncturing water
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filled barriers set up by police to keep them away. protesters have held a general strike, leading the island mostly shutdown and 200 flight cancellations at airport and stopping subway services through the morning dispute. hong kong leader carrie lam maintains she has no plans to resign in the face of what has become turbulent pro-democracy movements. >> such extensive disruptions in the name of certain demands or uncooperative movements, seriously undermined hong kong law and order. the city, we all love, and many of us helped to build, through the verge of a very dangerous situation. reporter: over the weaken speculation of direct chinese intervention grew when the
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chinese people's liberation army released this slick publicity video showing troops firing tear gas and dealing with mock street demonstrations like those in hong kong. it is considered a warning to protesters china might take more aggressive stance. china blaming foreign forces at this, pointing finger firmly in the direction of the west. neil? neil: thank you, my friend, very, very much. want to update you on the selloff, 579 points. i'm looking for anomalies, things that bear watching, arcane they might seem, this might be me focusing on this yield curve you hear so much about, your eyes glaze over when you talk about it, short-term rates compared to longer-term rate, right now they are the most extreme they have been since before the financial meltdown back in 2007. for example, a 10-year note is fetching you about 1.75%. and that is more than a third of a point below what you get for
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your money committing it for three month, something called three-month treasury bills. it is less than overnight money that fetches around 2.25% rate, sometimes 2%. so that is giving you an idea, when something like that happens, steep yield curve, it is really a panic kind of reaction, whether it is justified or not. a lot depends how long it lasts, what the market says we're worried about a slowdown, whatever is going on with china, everything else, we're looking at technicals. we don't like them. 25 of the 30 dow component are down. numbers, backdrop, doesn't look good. we follow the market. they're not always prescient, they're not always right, what they are signaling with the so-called inverted yield curve where shorter term rates are eclipsing those of longer term maturities, market's way of saying no, game over. more after this.
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neil: back to the shootings still shaking the nation, the president's response, blake burman with more. reporter: criticism of president trump he hasn't been forceful enough condemning white supremacy. just a couple weeks ago on capitol hill when the fbi director christopher wray testified, quote, the danger of white supremacist violent
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extremism is a persistent and pervasive threat. earlier today, at white house, diplomatic room, vice president buy his side, the president described the manifesto posted by the el paso, was consumed by racist hate and said the following. >> our nation must condemn racism and big bottomtry and white supremacy. these sinister ideologies must be defeated. hate has no place in america. hatred warps the mind, ravages the heart, and devours the soul. reporter: in that speech the president speech he revealed his ideas to stem mass shootings. health care reform. he endorsed red flag laws that allow guns to be taken away from those who present a imminent danger. i said there should be death penalty for hate crimes. he highlighted videogames and we
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need need to glorification of violence and social media companies to be able to see early warning signs better detected. >> directing the department of justice to work in partnership with local, state and federal agencies as well as special media companies to develop tools that can detect mass shooters before they strike. as an example, the monster in the parkland high school in florida had many red flags against him yet nobody took decisive action. reporter: missing from the president's proposals today, gun control measures. as the president said at one point quote, mental health pulls the trigger, not the gun. in a statement a little while ago, top democrats up on capitol hill, nancy pelosi and chuck schumer called on senator mitch mcconnell to bring to the floor, the president to support the background checks act of 2019 which calls for background checks for private gun sales. they say the following in a statement, quote, when he can't mention guns while talking about gun violence, it shows the
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president remains prisoner to the gun lobby and nra the public must weigh in and demand passage of this legislation for the safety of our children. neil? neil: blake, thank you very, very much, blake burman at white house. prescient though it might seem now, if you think about it, fbi director chris wray was warning about the lone white gunman when he was saying this is something we have to worry about. listen to this. >> just in the first three quarters of this year we had more domestic terrorism arrests than the prior year. it is about the same number of arrests as we have on international terrorism side. awful lot of the racially-motivated violent extremism is motivated by what you call a white supremacist type ideology. neil: a former nypd lieutenant is with us. darren what do you think of that? this is certainly a group we have to look at more closely, i
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don't know how but what do you think of the fbi director is saying? >> whenever we have a group that introduces a series of hate or instances, issues that would affect our population, think i we need to look at them. then one of the things we have to take into consideration, go back to the patriot act, when george w. bush was the president, he invoked a series of powers with the attorney general. those powers that the attorney yep received as a result of the patriot act primarily focused on terrorism. therefore i think this could be an essential component we can now focus on not just international terrorism but domestic terrorism as well. this initially focused on radical islam. we have a strong culture here in the united states that needs to be addressed. look at political persuasion of shooters, people try to make a right or left argument of it, saying in the case of pat trish
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crusius in the texas shooting he had a lot of radical i am my breaks rants online, the conner betts behind the attacks on dayton, ohio, espouse ad lot of liberal views. that doesn't seem to fly with me one way or the other. notorious shootings have in common, nikolas cruz in park land oraclely in texas or these latest two, angry young men and young men at that. what do you take of that? >> take into consideration of we live in population of 300 million people in the united states. so we'll have a larger population, a larger concentration of white males. so just based on statisticses with white males, you will have more, more white males contribute to whatever the case may be, be it gun violence, et cetera but that being said we can't necessarily focus on white
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male, quote, unquote spectacle in gun violence because this is overarching problem is not just a gun issue but a society al issue. when we look at mass shootings, one thing has been consistent, with the exception of the shooting that happened in ohio, generally there is some level of introduction that is introduced on social media. so now we need to focus on how can we create a partnership between law enforcement entities and social media companies so whereas when these types of threats do arise, that information can easily be transferred to law enforcement for the quick interdiction of the shooter. that has yet to be said. that begs the question of when are we going to get this up and running? neil: the president cited videogame makers as among the sort irritant in the system. not surprisingly a lot of game-makers from activision, electronic arts, microsoft, sony, nintendo, all those stocks
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are trading down on the notion that the federal government is coming to rein them in. do you believe they should be part of this national debate? that a lot of kids, whatever their race, whatever their age, are almost sort of numb to the effect of violence that is glorified in a lot of these games? >> i have yet to see empirical data that supports usage or participation in games such as call of duty, et cetera, that perpetuates mass shootings. that is something i have yet to see. quantitatively there is no statistic that supports that. i think it is more a level of, we take into consideration of background checks. granted with both of these shootings, these were legally-purchased weapons and the backgrounds on both of the individuals would not have prohibited them from purchasing a weapon but i truly believe a lot of it is the online rhetoric coupled with the social connections that people have in society.
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when i say the social connections, meaning friends, neighbors, people to that effect. those people if you speak to them, they will clearly reflect, this was in both case as sociopath, it was just a matter of time for him to commit horrific carnage. police and community relationship would be germane and officers actually taking a look at this person. we look what happened with the parkland shooting with nikolas cruz. this was clearly a individual that had a problem. therefore law enforcement needs to do the part, look at individuals accordingly. if they see something out of line, take appropriate action. neil: wise words all, thank you for weighing in on this darren, i do appreciate it. darren porcher following all of this. as darren was speaking, always looking for pockets in the market. revisiting session lows to see what else might be percolating beneath the surface. the gold is doing okay.
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it hit 6-year high. another volatile investment is enjoying a rare moment in the sun. bitcoin, for example. park your money in alternative to stocks, but no more so than the safety of the u.s. bond market. remember for now it is backed by uncle sam. and that is where a lot of money is finding its way. that despite the paltry yields about 1.75 for 10-year note. that is what you get for ten years, which is less than you get committed if you buy overnight bank paper to the tune of about 2.25%. 2.25% committing your money for one day. 1.75, committing it for 10 years. that's weird. more after this. corey is living with metastatic breast cancer, which is breast cancer that has spread to other parts of her body.
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now you can, with! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. saves you time and money. make it simple. make it ship sticks. neil: iran seized another foreign oil tanker in the gulf. seven sailers on board that tanker have been detained. we don't know from which
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country, you know it was detained. we do know in the past it has seized ships from the united arab emirates. at least two from the brits. when we get exactly the idea who owned the tanker we'll pass that along. it added to volatility, doesn't help things in that neck of the woods things are getting more tone with us. which explains gold rocketing ahead, highest prices since 2013. we have price futures group senior analyst phil flynn with us on this. first we don't know a lot about the latest iranian seizure. what we do know typically in the oil markets people buy up oil first, think about it later. what are they doing now? >> we're seeing that as well. oil well off the lows from earlier today. came on a report that iran basically is taunting the eu, saying, if you don't do anything about the u.s. and sanctions. we'll continue to exceed
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enriching uranium past agreed-upon levels. they're playing hardball not only with the u.s. and world when it comes to this but oil has reacted. you mentioned oil taking a tanker they took another one. when do you think iran would seize a tanker in the persian gulf with oil, and it would be china, right? china exceeded that with the tit-for-tat trade war what we're seeing with currency manipulation and that's gold. a lot of people believe china is manipulating their currency when their currency of course fell on the yuan to a seven-year low. people are saying that that's currency manipulation. if you're in china, you have to get your money out of there. how do you protect your wealth if they continue to devalue their currency? one way is gold. now if you look at gold, neil, it has been on a tear, not just today but for weeks and weeks. central banks around the globe
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have purchased the most amount of gold we've seen ever according to the world gold council at least for the last 20 years. central banks are very concerned about an ongoing currency war. when that happens, gold will benefit. that is what we're seeing today. neil: thank you my friend, very, very much. phil flynn, you're not imagining things. we're revisiting session lows with the dow down almost 700 points. all dow 30 component are down. not surprisingly ones more vulnerable with ones happening halfway across the planet are ones taking it on the chin including caterpillar, boeing, apple, by extension nike but if you go outside the dow, skechers, best buy, kohl's, anyone who relies on business there and consumer activity here, are caught in the consumer downdraft. the only way to protect your money is in the bond market with the yield 1.75%, the argument
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foes as usually in times of strife, better than guarranty, than losing our shirts. protect the principle. keep the money you have, don't risk anything else. that is the prevailing view, for now, after this. hey! i'm bill slowsky jr.,
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neil: we are at session lows. down to around 25,761. still early in the going here. anything can change, but right now all of this trade related, slowdown related. a report of the services sector that seemed to echo what is happening with manufacturing not heading south. the growth is slowing. that is fueling argument federal reserve better cut rates.
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this go-round, even with bond prices up, yields way, way down, it is not the tonic it has been in the past for the stock market charlie gasparino with a read on all of this. what do you think? >> tell what you people are telling me. i think there was a report in the journal or "the times" said every economic advisor to the president, except for one, larry kudlow, mnuchin, even lighthizer, that they are against these round of tariffs, the position he is taking with china, except for one guy, and that is peter navarro. neil: they were against it because they argue we're making incremental progress. by the way, we're engaging tit-for-tat trade wars which never end well. it will impact our farmers and go down the line. everybody that needs, is looking to do business with china selling stuff there. because they are going to retaliate. trump did, wants to do the tariffs anyway.
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and i think, listen, i personally like peter navarro. i speak with him on the phone but, the markets, the major investors think that he is ill-equipped to be giving major trade policy, okay? they look at him, when he was on with chris wallace this weekend and he started to argue the president's point, which is the point that you said was absurd on saturday, that you know, the chinese will pay for tariffs. when you get, when you start arguing that to a rational investors, who know that tariffs are passed on to consumers either directly or indirectly, that is the guy running the show, who has the president's ear, that's, equivalent to hitting the sell button. the algorithms kick in equivalent to selling. what you said trending on twitter on saturday, drinking my coffee, saw neil cavuto --
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neil: we tried to have you on. kept going to voice mail. >> my phone is off the hook on saturday morning. what you did, what wallace did, was record, i believes it watt journal, the triple whammy of president who thinks the chinese actually pay for tariffs, the guy who is defending him publicly, larry kudlow would never defend that, it makes no sense. someone idealogically rigid -- neil: their official view as you reported this is not having deleterious effect on the consumer, look at strength of the economy and the consumer. >> right. neil: what you were reporting last week, the latest waves of tariffs could be more immediate. >> could be more immediate. markets are factoring in. i don't know if it will impact consumers, the net-net will be worse because we do have tax cuts, regulatory cuts. i don't know where it comes out. neil: some worry it is offsetting whatever gain. >> that is another thing. the markets are clearly having a debate about it.
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i'll tell you leaving economic policy to peter navarro is not something market makers don't like. neil: they don't like it. charlie brady, our genius, the dow is on track for its worst day since last december. what do you make of that? >> well that's when, you had the fed tightening. neil: since january 3rd. it has to be down more than 2.37%. >> that is when you had the fed tightening on both ends, both on the short end and long end. neil: coming after that disasterous month of december. >> trade stuff heating up. you had the double-whammy. neil: it is not affecting deals in the works, like cbs viacom. what is going on there? >> there are other factors why that is going to happen. i think it will happen, could happen as early as thursday from what i understand. i think it is a 50/50 chance what i'm being told that finally, shari redstone from
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sumner redstone's daughter, essentially controlling, she is leading the company, national amusements, which has controlling shares in both these big media companies, she has wanted to see the merger since 2016, for a lot of reasons we reported, written about on it is finally at the stage where it is happening. we were first to report, bob bakish, if it happens will be the ceo. joe ianniello, ceo of cbs will essentially run cbs. be his nominal number two through a transitionary process. unclear whether he stays long term. the question is, what happens next. just let me say, there is no normal agreement no matter what you kind of -- what the journal reported on friday or thursday is exactly what we've been saying. there is a set of working principles. among those working principles is management structure, bakish running it. there is nothing on paper says
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this is happening right now. it may happen in the next 24, 48 hours, but right now nothing really on paper. but i am told it's a 50/50 chance when both companies report earnings on thursday, that this thing could be formally announced. they were the national -- the question is what comes next? they have scale, may go out and buy something like a discovery. the other half are saying no, they are going to sell to somebody. shari redstone wants to cash out of her empire. she wants to leave a legacy for her kids, her grandkids. the problem for a lot of media companies, there are not a lot of buyers. tech is not stepping up to the plate providing cash. neil: they're hanging on to their cash. >> or they're making their own content. that is where we are this week could be a beg week. neil: threw a lot at you. handles it flawlessly.
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by the way markets betting we'll see a rate cut not only next month but six weeks after that. the probability doubled an or tripled depending on the time period because of this, after this. let me ask you something. can the past help you write the future? can you feel calm in the eye of a storm? can you do more with less? can you raise the bar while reducing your footprint?
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neil: all right. we hit session lows on dow right now. it is on pace for its biggest loss since january 3rd. the nasdaq, for its biggest loss since may 13th. something that might have picked up the selling steam are reports that china isn't ruling out the possibility of responding tit for tat, if you will, considering slapping tariffs on u.s. agricultural products including items that china was planning to or did purchase after august 3rd. in other words, anything is open for retribution and the back-and-forth continues among the countries as the administration charges that the chinese have deliberately devalued their currency not only
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to cushion the blows of these tariffs but to stick it back to the united states and say we can absorb this for as long as you can, pal. let us get the read right now from jackie deangelis on the latest what's moving and to the point, what is not at the corner of wall and broad. jackie: good afternoon, neil. the point you just hit on is what the markets are so worried about, this back-and-forth and the fact that august could see more volatility as a result of china and trade than anybody was expecting. you can see the market now, new session lows. 746 points is the selloff we are seeing on the dow. certainly a brutal day for technology here. take a look at apple, amazon, facebook, google, microsoft. they are all lower across the board. remember, these were the stocks that took us all up on the way up. semiconductors are getting hit as well, because these companies are ones that have china exposure. it's not just about unresolved trade issues. it's about tariff and currency fluctuations that are going to impact these businesses. another sector swimming in
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losses today, retail, which makes a lot of sense. these are companies that have exposure to china through manufacturing and also sales there. names like kohl's, macy's, target, nike, abercrombie, best buy, the list goes on and on. now, as i mentioned, part of it is tariffs but on the currency end, the chinese yuan has fallen below the $7 level for the first time in 11 years. what that means is china's counter-punch to us as a result of a new round of tariffs was currency devaluation, stronger dollar, weaker yuan means our goods become more expensive and that can slow sales. then you have the inverted yield curve. two points to make here. first, it's been inverted since late may. worries investors have had, they were hoping to see it turn around but it does indicate a possible recession. second, the yield curve has widened the most since 2007. what does that mean? well, money is flowing into longer term bonds, they are
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considered safer, and markets of course typically see that as a negative sign. so you can see this is all sort of building on itself. neil: it certainly is. okay. very good, jackie. sorry, i'm looking at some notes here, too. with the fall-off here, as pronounced as it is, we should point out the s&p, even though it's down about 6% from its highs, it's still up about 14% this year. so the markets, if you step way back, are absorbing this but obviously, if it were to continue for a long time, that would be a worry. then this phenomenon where people are committing money out ten years at paltry yields because they don't know how things will go but better that protection that something, where you can get more for your money overnight or in three-month bills, that phenomena, that inverted yield curve is as much an insurance play on the part of investors to sort of hedge their bets if this were to drag on awhile which is prompting that
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upside down nature in yields. to simpler trading, director of operations danielle shay, lindsey bell, and friend of donald trump, new york city republican, joe borelli. welcome to all. joe, i begin with you on this notion that president trump might have started this and maybe fully aware of the implications by expanding these tariffs to the remaining goods from china that weren't subject to tariffs, and maybe saw the response that would happen from the chinese but didn't care. what do you think? >> i don't know if you can historically say president trump started it. i think certainly becoming president of the united states running on a message -- neil: started this latest. >> you know, look, we had this cooling-off period back in june when both leaders met. i think expectations were not met from perhaps either side. you have to ask, we talked about this backstage, how much of this might be related somewhat to hong kong, certainly "the washington post" put out an editorial saying trump should start pushing back on what the
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chinese want to do there. i don't think you can put this definitively on donald trump. this is something that has been going on historically back to the clinton administration. neil: i do not mean, i already get enough mail, i don't want to get any more nasty stuff, i'm vulnerable. but lindsey, one of the things i noticed, china is upping the ante. it is talking about not really the possibility of slapping tariffs on u.s. agricultural products. if they're blinking, they have a funny way of showing it. >> i think you are absolutely right. it goes to show they are really playing hardball here, going after trump's base in the midwest. these agricultural farmers. they are now putting tariffs on items they have already sold into china and i have also read they are halting all sales of agricultural products to china. china has been told, chinese companies have been told not to buy any u.s. ag goods. neil: word is out don't cooperate. >> yes. exactly. it just goes to show that they are in this fight for the long haul.
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so the chances of any deal getting done sooner have been decreased. neil: what if we don't get a deal at all? when you talk to your clients, do they factor in that possibility? maybe they are dissatisfied because a bad deal is better than no deal anyway, or worse. maybe that's what the markets are sort of digesting. >> exactly. so for us, we really were looking at this strong bullish case into the end of may going into earnings season, because we thought there was going to be a resolution with the trade deal and for us, that meant to buy. so this last round sort of came out of nowhere but at the same time, i think that president trump timed it feffectively wit the fed deciding to adjust monetary policy. neil: maybe this is a way to ask for another one -- >> exactly. neil: what do you think, that's what he wanted and my gosh, he might just get it. >> last week when i saw the news
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of the 10% tariff, i thought to myself the same thing, maybe he's doing this to get more reaction out of the fed. but i think to your point, this is a weak period for the market in general, between august and september. this is going to create more volatility. but there's just a lot of uncertainty right now in the market. that's why you are seeing the sharp reaction that you are currently. 10% tariffs on the remaining goods, it's probably not going to have a major economic impact but it could escalate. that's where the big worry goes. the consumer has been very strong and has been able to absorb increased prices at consumer staple companies, even some industrial companies -- neil: a lot of american distributors have absorbed those costs, and china, you could argue, has helped them by devaluing their currency but there's only so much you can push that. >> i think this is somewhat more of a gentle reminder, somewhat of a quasi-authoritative state, they can have their consumers take pain longer than we can because there's no political
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ramifications for xi jinping and president trump is on the ballot. what you said about hitting them where it hurts with voters, we just don't see that in polls. a quinnipiac poll last week from iowa still has president trump beating five out of six of his potential democratic contenders. neil: in iowa. >> in iowa, a swing state, where you would think the farm markets are playing a role. neil: that's to our point about they are targeting farmers, the chinese are, you might have that base now but he won't have it for long. >> we are not seeing that in the polls. his overall economic numbers are still extremely high. neil: i wouldn't note extremely high. given the strong economy, you could argue it could be higher. but the president has said for some time, whatever you make of him on trade or these other issues, look, i'm thrown out of office, you can kiss this bull market good-bye, you can kiss this economy good-bye, things are going to crash, that's been his sort of backstop. you buy that? >> i do buy it.
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i think that's the reason why he's going to come to a deal at some point before 2020 because right now, he's motivated -- neil: day before the election? >> hopefully before that. but he's motivated to fulfill his campaign promises before the next election cycle. i think for that reason he will do so but at this point, with the tit for tat, we just don't know who's going to win. neil: like my italian relatives. it's ugly. i'm curious about just the market reaction here. normally, when you see interest rates tumble, as they have been, and then of course, people factor in additional rate cuts, notice wait a minute, they are now definitely looking at at least two more, maybe the second one is a half point cut, so it's getting kind of, you know, crazy talk and maybe that's good talk, but it's certainly not helping stocks. why is that? >> no. it hasn't been. usually what you see in a rate cutting cycle, you see the fed usually cut historically three
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times. but that has to be flown through the market. it takes time to get into the market but interest rates have been accommodative to consumers throughout this rate-hiking process. remember before last week, we were at 2.25% to 2.5%, very low rate by historical standards. neil: true. by any standards. >> yes. i don't think you will see this major bump in business spending or consumer spending because of a reduction now. it's more the fed saying, signaling we got your back if things do get a little crazy and also, i have been saying this for awhile, they had to get in line with the interest rates around the world, many of which are in negative territory. when you see that, you see a lot of investors flock to safe haven assets like the u.s. treasury, 2% yield is better than a negative yield. neil: you're right about that. real quick on that subject, one of the things you often hear is markets factor in the effect of something and maybe the bond market is factoring in forget
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the trade front, that we are in for a slowdown. doesn't mean a recession, but a slowdown. are you in that camp? >> yes, i can definitely see that. that's also another place investors can look to put their money in when they are worried about the overall stock market. specifically for today -- neil: it's very cheap. you get very unsatisfied. >> yes, yes, that's correct. that's a good place to look for right now. gold as well. for me, what i'm looking for are the hot market leaders. i want to see microsoft, amazon, netflix, i want to see those stocks start to lift off as of right now, today, they're down pretty heavily. neil: still had a good year. a very good year. >> they did. when they start turning around, i'm going to look to get back into equities. neil: what is the political fallout if it lingers on? >> so the economy right now is president trump's biggest asset and also his biggest political liability. the biggest justification for sending donald trump back to
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office, as we pointed out, was the fact that will this economy continue. the trend line in the economy is still good despite today or any given bad day. and if that happens to collapse and we get into that recession, the argument is going to be much more difficult for the public to digest as to why they should keep trump in office. neil: hang in there, if you can just stay there. i want to bring this next fellow into the mix. matt priest is the ceo of the footwear distributors and retailers. he was so upset about the latest wave of tariffs the president announced, he wrote him a letter. i don't know if the president answered back. matt, your argument was bad timing, bad move, it's only going to make things worse. did i get the gist of it? >> yeah, you got the gist of it right off the bat. here we are heading into holiday season, we already pay exorbitant duties on footwear imports, 99% of all shoes sold in the u.s. are made overseas, 70% which come from china, and here we are looking to jack up prices on all consumer goods that american companies pay and pass on to the consumer. our point is i wish the
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administration would just be honest with us, if they are trying to create a consumer syntax to change american consumer behavior but they seem to say no pain for us, as the president has said and navarro said, your own chris wallace on sunday. so we are left scratching our heads to figure out what is the economic path forward and where is the economic common sense when it comes to this action. neil: do you think what peter navarro says, that i love tariffs, the president says i love tariffs, that that is a worry, to you? >> yeah. it's a huge worry. we have had tariffs for 90 years. our anniversary is next year. so we pay $3 billion a year assessed on every type of good. when you look at this, it doesn't seem to -- there doesn't seem to be kind of a line of sight as to how do we end this. because the chinese have struck back with a vengeance overnight and today. we find ourselves kind of caught in the middle. the american consumer is going to continue to pay for this policy decision that ultimately
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now the pain is being spread out throughout our entire economy, with the stock market crash going down or the adjustment and then including consumer prices, and this is every single consumer good. so it's not just about footwear. it's about apparel and toothbrushes and paper products and electronics and everything that americans buy. neil: you know, we have gotten concerned by these kind of developments in the past. one of the things that's always happened, those who fretted the most in the moment regretted the opportunity to buy in that moment. that's almost to a crisis how it's gone. you buy that? >> look at december last year, right? it was a great buying opportunity. sure, i think that there's a lot of time between now and september 1st so a lot of different things can obviously happen, and i think china has a lot to lose as well, too, because a lot of these companies that operate and manufacture products in china, you see them already moving their supply chains around. hasbro has been one that's trying to get the products they
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manufacture in china down to 50% of the goods sold to the u.s. i'm sure they will rethink about getting that to a lower number if possible going forward. there are a lot of companies moving out of the country. neil: you get a sense that each side is looking at how they can creatively stick it to the other. i might have misstated before when i talked about farm goods, tariffs going up. charles payne reminds me that they are revisiting the suspension and exemptions for farm goods. they weren't getting tariffed, i guess. now they will be which is still an increase in their burden. having said that, do you get a sense that we are going to try to one-up them? i'm almost thinking before this day is out, the president's going to raise these 10% tariffs to 25%. you know what i'm getting at? we're in that -- >> yes, absolutely. you can see that from his tweets today. he's very upset about the
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devaluing of the yuan and so right now, he's placed that 10%. next thing he can do very easily, raise that to 25%. that will send even more reverberating effects throughout the consumer staples industry, particularly with footwear because we are already paying high prices for shoes. that will be one of the specific industries that will be impacted. that's going to reverberate throughout the entire economy. neil: we have been waiting for that consumer impact. once it starts appearing, joe, do you think people say whoa, whoa, whoa? >> you know, look, nobody wants to pay more for their nikes or for any consumer good. i just think it's very difficult to be this entrenched in sort of this brinkmanship with china and have any way to back off it without getting some material gain. i wouldn't -- i wouldn't be surprised if this is not just a one or two-day problem we see right now, if that we're stuck in this for a little bit. neil: matt, the president said american consumers aren't feeling this, aren't exposed to this, it's the chinese
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government that's feeling the pain for this and the proof of their de valuation and all that. i get that but you can only push that so long before customers, american consumers in general, start seeing it pop up at their local retail establishment, then they have to decide in this patriotic fervor to stick it to the chinese, whether they are okay sticking it to themselves. >> that's a great point. the currency revaluation, if the currency drops one or two points, that doesn't make up for the 10% increase we'll see on september 1st. so it is inevitable that as prices go up, the consumers will be hit and then we track these on a yearly, monthly, yearly basis and we sea the that as pr go up at the border, no matter the reason, if it's increased labor costs, increased energy costs, higher duties assessed at the border, footwear consumers pay. that plays out across every industry. so we now find ourselves in a position where at the end of the day, is there pain or not.
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chris had trouble nailing down peter on this point, mr. navarro on this point. are we going to have to pay, will there be pain for the american consumer. our answer is absolutely yes, particularly as we head into q4. this will have a huge impact heading into the holiday season. neil: you think about that, september 1, back to school and all of that, retailers planning for the christmas holiday season, it could be a mess. matt, thank you for taking the time. appreciate it. >> my pleasure. neil: edward lawrence on the latest what the chinese are doing and saying. edward? reporter: here we go. again, the chinese must be reading the president's twitter feed overnight in china there. now it appears the chinese state media is now reporting that china is going to suspend the exemptions they have offered to buy agriculture from the united states. they had originally given some tax exemptions. the tariff exemptions, on the imports of certain agriculture, soybeans being one of those. now the chinese saying they are going to back off that, they are not going to honor those exemptions, they are going to
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withdraw them as of august 3rd. they are also reporting, chinese state media is also reporting the chinese have told their government entities not to buy u.s. agriculture from the u.s. that has a lot of the private entities in china sort of pausing at the moment to see hey, what should we do as this all shakes out. but the big news here is the exemptions that china was going to offer on the tariffs are now looking like they are going to be rolled back, and that tariff on u.s. agriculture imports into china will remain gory back into place. sort of upping the ante here. neil: i have a thick skull and obscenely large head. if you can help me with this, we didn't tariff these items, right, and now we are going to start? reporter: no, this is all from the chinese side. so china tariffed u.s. imports of soybeans, up to 15% in some cases. they had then given exemptions to make that tariff lower, 5%, 0 -- neil: now they are taking those
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exemptions away. the net result is farmers getting screwed, right? reporter: it does result in farmers, our products more expensive in china, our agricultural products being more expensive again in china at this point. neil: thank you very much. lindsey bell told me to use that crass language when referring to this phenomenon. lindsey, danielle, joe kindly decided to stay under extreme pressure to remain in their seats for the rest of the hour. lindsey, that's an interesting development in and of itself. i'm thinking in creative accounting, who else have we given exemptions to on either side, for whom now we might reconsider them? on either side? >> i think it's a great question. it could get muddied in the waters because there's been a lot of different exemptions and then you think about the 10% tariffs that are going on the remaining good, a lot of which are consumer focused. the apple iphone has been called out obviously as one of the biggest consumer products that
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will be tariffed going forward. will they get the exemption because trump has made points over twitter that they won't be exempted, they should bring their manufacturing back to the u.s. neil: can't do that overnight. >> this is a very fluid situation that we've got to keep our eye on. it will impact the consumer different ways. neil: i don't know how it's being received in china. we do know there's been a lot of buying of huawei products in china, almost like an act of patriotism as "wall street journal" puts it and not so many apple products. i'm wondering if that accelerates. >> oh, definitely. the problem with huawei and apple, that is going to continue to accelerate and continue to impact apple's bottom line. at the end of the day, apple has too much reliance on the sales of their iphone and china is a huge market for that. so as this trade war continues to escalate, the chinese are going to be buying more huawei, less apple and we are going to
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continue to have issues there. neil: you know, if i'm a u.s. ceo, i'm sure it's happened already, i hedge my bets. i don't know how this turns out, but i'm not going to rely on much as i have on china in the past, i might spread the wealth and look at vietnam, other locations, and that will be the case after whatever deal we score, assuming we do. you could make an argument that china, the well is already poisoned here. >> yeah, i would probably say the well has been poisoned with them for quite awhile, even going into this. but your point is well taken. even if we see individual investors and hedge funds and everyone going into bonds and whatnot today, pulling out of the equities, you have to make the assumption the ceos of major companies are looking at the same thing and making the same collisions long term. i think that's probably part of the reason why we are seeing so much red today. neil: then there is hong kong.
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susan li on the latest there. that's sort of a wild card development but i know one weekend after another, they continue to have protests. this latest weekend, chinese authorities are saying all right, you made your point, you can stop and they're not stopping. how does that figure into this? susan: well, i have never seen hong kong like this. it's known, it is a very peaceful city. you can walk down the streets in the middle of any part of it, two or three or four a.m. and feel virtually safe. but the ninth week, five straight days of big protests that you saw on sunday and also monday as well and that's really crippling the transport system. we had more than 200 flights being canceled because of aviation employees and also civil servants have walked off the job in what they call this hong kong strike that took place on monday, and these protests with tear gas being fired has now fanned out across the city in half a dozen spots. we also heard from carrie lam, the embattled hong kong chief
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executive, who says that it's outside forces right now and she warns hong kongers as well against challenging beijing and they are challenging the one country two systems mantra. a lot of people found that audacious because some would argue beijing coming into hong kong to kidnap people off the streets is already challenging the one country, two systems and also trying to implement this extradition treaty which of course sparked these protests back in early june. neil: stay there. i want to revisit you in just a second. one of the things that's kind of interesting when you look at everything that's going on is this notion that hong kong might have more of an impact here than is generally considered the case. it's obviously a financial mecca, and if they clamp down on that, this goes way beyond hong kong, right? this goes to the entire region, potentially the world. >> exactly. i think that for hong kong's
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sake, they are kind of lucky in the sense we are having this trade dispute with china, because they may have gone through with this extradition bill and just accepted it without the dispute from the u.s. with china. i think that they have that in their back corner, it would be interesting to see where president trump comes out. he hasn't really spoken very strongly -- neil: that's telling in and of itself. >> that's one lever he could pull. neil: susan, back to you on that, what do you read into the fact the president hasn't commented that much on hong kong? it's the one lever he hasn't pushed and others have told him to pry and he has not. what do you make of that? susan: it's probably smart of him to do that at this point. he basically has said that hong kong is an issue for the chinese authorities to deal with. i would say xi jinping, this kind of hampers the chinese president's stance because in his own backyard, he is dealing with his own issues in the midst of trying to negotiate this
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u.s./china trade deal. it's ulterior motives, that's what carrie lam said, talking about western influences that have continued these protests. i just want to show you the latest that's making the rounds across social media. this is concerning to me, especially for those that have lived in hong kong for many, many years. molotov cocktails are being thrown at hong kong police stations. again, as i said to you, this is a very peaceful town. i have never seen anything like this. i'm sure if you ever talk to anyone who has lived in hong kong and been there for a sustained time, that this is probably the most -- probably the most violent and chaotic they have seen this city, which is by the way, the international doorstep to china and probably the worst scenes they have encountered for the past 20 years or so. neil: you know, people of a certain generation, let's say old fogies like me start remembering tiananmen square, long before china became the economic juggernaut it is. and they would surely never respond that way. but i had a guest on, gordon
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chang who writes about the growing threat of china, et cetera, at their core he says they are a military power and will always revert back to that, no matter the clothing of capitalist powerhouse. what do you make of that? >> yes. i think they might have to. because china is not going to stand for these continued protests. at some point they are going to have to step in. they are probably not going to want to give in to any of trump's demands so -- neil: that's the way they're looking at it. they are blaming president trump or the united states for this, this isn't hong kong inspired, this is donald trump slash u.s. inspired. >> it goes back to the question, who has more leverage in the trade talks based on what's happening in hong kong. i think the fear also is that in 2019, unlike with tiananmen square, this sort of protest could fester into other cities in china, would also potentially demand different kinds of freedoms. this is a regime that will inevitably fall back on brutality and potentially
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violence and the way authoritarian regimes usually crack down. that's what they are afraid of. the chinese don't want that. but they are afraid of that vibe that's happening right now in hong kong spreading. neil: guys, if you can stay here. another development on the oil front and more. a seized oil tanker. sean, it's interesting, now britain is saying that it would join a u.s. led naval security mission to the strait of hormuz where this latest seizure occurred. we don't know the vessel that was taken, from which country it was taken, it had seven individuals on board. we do know the sailors captured two weeks ago are still being held by the iranians. they have upped the ante, yet oil prices have been relatively flat. i'm wondering if that's global demand and the rather, you know, anemic world economy dictating prices.
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what do you think? >> i think you are correct in part for that. i think this whole trade issue is potentially going to slow down global growth. that would have a negative impact on oil prices. also related to the trade thing is the manipulation of currency. as the dollar and yen rise versus other world countries, that becomes deflationary. so there's a secondary effect to this whole trade war and manipulation of the war about currencies that's having a big impact on oil prices. neil: i always think if we were not producing as much oil, the independence we have achieved by and large since opec was really sticking it to us, you know, decades ago, these would have entirely different reactions today, wouldn't they? >> oh, there's no doubt. when we were dependent as we were on middle east oil, if you had what was going on in the strait today, you would probably see oil at $80 or $90 a barrel just based on the threat that they could completely choke down the supply. now as we sit here in the united
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states and the development we have made and the amount of oil and energy that we're producing on our own, as a net exporter, we are less affected by some of these turmoil issues that arise from time to time in the middle east. neil: you're right. every time it's been the same. one of the things i did notice is we got news of this tanker seizure earlier today, the vix shot up a little, volatility index, and then kind of shut down again. but there is a lot of nervousness out there, whether it's in response to developments like this or the general world, you know, malaise gripping a lot of markets. what do you think? >> i think it's just a reminder these geopolitical tensions remain in the market, too. it's another uncertainty so it's not just china and the u.s. trade that's impacting the future of demand around the world and market projections into 2020. it's just another thing we need to be mindful of and a reminder that this is a real pressure on the markets, on companies,
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energy companies, we saw exxon and chevron report last week, and oil prices where they've been, they're down on a year over year basis. they have been negatively impacting these companies. neil: i'm wondering if the market has it wrong with the two more rate cuts they seem to be factoring in, whether that will be enough. if you've got developments like this, if you've got negative interest rates going on in germany and france, i think italy, this can't continue. all of a sudden, then, it's going to take three, four. i don't know. we are back down to zero. what do you think? >> yes, absolutely i agree with you. looking at the way that the situation with china has unfolded, the thing is that it's going to have long-term impacts, particularly the most recent tariffs on retail goods but the rate cut, while it will have long term impacts as well, you initially see that burst like we saw last week when the fed chair announced there was going to be a cut, so the market wants that
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initially, but then forgets the next day, whereas the trade war is still causing long-term impact. neil: i wonder if it goes beyond the trade wafrmer. >> if interest rates are zero because of demand slowing down, that's a bigger problem than a couple rate cuts to juice the economy like in the late '90s and then take off again. yeah, it's a different situation. what if we go to negative interest rates. neil: i'm wondering, that obviously could signal a weaker dollar. i know the president wants that, but for oil and everything else, it certainly screws things up, does it not? >> well, yeah, that relationship certainly exists and you know, part of the challenge is trying to find a balance globally with regard to interest rates where most developed nations are much lower than us and we are sitting here higher. you know, that causes people to buy dollars in order to buy these treasuries. i was more optimistic earlier this year that we would get some resolution on the trade side because i thought the president
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might want it as a campaign feather in his cap. what i'm switching my view to now is i think he would like to keep this thing dragging out all the way through the election and use it as a campaign advantage to say you know, no matter who winds up on the other side, whoever the nominee is, i can see the president saying you can't trust them to continue to do this, we will just go back to the old thing. that's very troubling. i think that's what the recent escalation has caused more agita in the market than maybe it potentially would have because i don't think the market is starting to believe any more sl there's a solution coming in the short run and the market is trying to figure out what are profits going to be down the road and what multiple should we pay for them. we have to find that equilibrium. neil: it is rich he would use our term. >> an irish guy, right? neil: well said. well put. there is sort of a view out
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there that the president is pushing this back maybe to make a big statement close to the election where the impact could be considerable. i don't want to be jaded. do you buy that argument? >> i don't know. i don't think this is something he wants to leave out on the table going into next election. i said before, the economy is his biggest strength and biggest liability. he is someone who ran as the deal maker. neil: if this were to linger it would only reverse the numbers. >> it would damage the reputation of being a deal maker. that's something he doesn't want to be in that position going into 2020. i think we could potentially see the next two weeks as a momentous point of the presidency. you have this trifecta of problems with china, with iran seizing ships and domestically with these shootings. this will be one of those make or break weeks for a president, whether it's donald trump or whoever is in the white house. it will be exciting to watch. neil: sean, thank you very much. very good insights on what's happening with oil. we've got former republican
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governor of indiana, mitch daniels, who has been warning about what's going on in washington as a backdrop to this, that it's far mofrre of a longer term worry. he might be one of the few who is these days. governor, always good to have you. obviously days like this push that further back as an issue but you are worried, and you are worried still because neither party is, right? >> i am. the arithmetic couldn't be more clear, as my democratic friend erskine bowles once said, most predictable crisis in american history and neither party showing any interest, let alone action on it. it's really an injustice for the young people on this campus that i'm surrounded by every day, and to everyone in their generation who is going to have a very unfair burden placed on them, money spent not for their future but for the convenience of their elders, my generation and yours.
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so sooner or later reckoning bu crowded out of the consciousness by current events. neil: it does help to address these type of situations when economic times are good. bill clinton and newt gingrich decided to forge a pact to try to deal with this problem, it worked. it didn't hurt matters any the underlying economy was good, we had the internet boom going on. you could make a very good argument that was the time to do it. we had similarly strong economic times today, but we are not doing it. >> i couldn't put it any better. that's right. both from natural forces, that is to say, in good times, deficits and debt are supposed to be moderating. we have seen the reverse under both the last two administrations. then just in terms of the politics of things, it ought to be a little easier to make these decisions when the economy is as strong as it is now, people's wages are rising.
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there's a lot to like about this economy right now. but the one big exception is that our future obligations are continuing to run away from us. neil: when the president referred to this latest budget deal, the one that pushes back even worrying about the debt ceiling for another two years, he said we'll get around to cutting later, next year. what did you make of that? >> we heard that tune before from presidents of both parties. it's always next year or the year after. the dessert always comes first. the spinach, later. neil: nothing wrong with that, by the way. go ahead. >> maybe not at thanksgiving but when our children's futures are at stake, it's a little different stakes. neil: on that point, governor, i'm joined by my panel here, lindsey, one of the arguments for doing something now or at least breathing a sigh of relief
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with the debt are interest rates are so low, it's cheap to carry but it doesn't take much for it not to be cheap to carry. with interest rates likely going down, you could argue that that's less again of an incentive to deal with this because it is cheap to carry. >> right. exactly. when interest rates are low, you know, you want to take on more debt. we actually saw a lot of the small companies in this country take on a lot of debt over the last ten years because interest rates have been slow low. neil: some that shouldn't have. >> that's one area i worry about, too. to your point, you are seeing government debt around the world exploding. i think that's a bigger problem than our last financial crisis with corporate debt and really, the consumer balance sheet who took on all those mortgages that they really couldn't afford. now i think it's the government we have to worry about. neil: you know, i know you like the president, you are good friends with the president, good for you, but a number of democratic candidates are
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seizing on this. elizabeth warren, chief among them. we are going to relive the housing nightmare, we are going to have another financial crisis because we are tipping the scales again. i know she's running for president. i know that kind of scare tactic will generate headlines and interest in what she's saying. but what do you make of what she's saying? because she did predict and map out, she was a guest on this show many times, in the days she liked fox, and she had warned then about that approaching storm. what do you make of that? >> well, this is also the elizabeth warren and one of many of the 2020 candidates who have been in the senate for decades and have not chosen to act on debt and restraining the debt and reforming entitlements and all the things that would have to accompany reforming the debt we currently now have. yet they haven't acted. i think it's going to be very politically tenuous for either party to try to make any type of concession to address this issue before 2020. i think that's just the reality. the budget deal we may disagree
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on, bithink it's more reflective of a political reality than any absence of a goal of reforming anything. neil: do you buy that, governor, that it's not necessarily an imminent risk but it's out there? >> well, regrettably, i agree with the analysis not to expect anything until after the next presidential election, if then. and maybe not then. the rather cavalier notion it just takes a crisis, then we'll act, is so callous with regard to the people who are counting on social security, counting on medicare, have been promised during their working lives things that will not be deliverable. i think we have already waited too long. a few years ago, a case could be made if we just get started, we can keep all the promises and then try to secure something akin to them for future generations.
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we may have moved past that point just arithmetically. we still are looking for that combination of forces which will say listen, a mature democracy has to be able to place tomorrow ahead of today, the young ahead of the old or at least on a par, and up to this point, we are flunking that test. neil: so you get some credence to the possibility that elizabeth warren raises, but it could be a different kind of crisis? >> i think there's a good chance it would be different. debt is going to produce very bad consequences at the levels we have. your panel is very correct to point out that it's government at all levels in multiple countries and by the way, corporate, the debt is pretty high, too. it may be of a different kind. banks are better capitalized. we have less chance of a financial sector run, but that doesn't mean the consequences
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couldn't be really severe anyway. neil: governor, thank you for taking the time. just to update you on the technicality here, elizabeth warren has been a senator since january 2013. her prior comments on this show was when she was being considered for the consumer financial protection bureau. just want to get that out there. jackie deangelis at the new york stock exchange, what she's hearing on the day. the dow is down about 675 points. jackie? jackie: well, markets obviously off the session lows but still very very steep losses here. what traders are saying is the most troubling and it's tit for tat that you were talking about with china, this back-and-forth, that it's going to start to trickle down into company earnings. that had been subdued at least with the first round of tariffs and retaliation. now this second round and also what's happening with the currency here, it's not just about the tariffs themselves and having to pay more for certain
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items that are coming into the country, but it's also about this notion that if you are doing business with china, and there's a stronger dollar and weaker yuan, united states produced goods are going to be more expensive. that could have a chilling effect on sales. so this is more in anticipation of what's to come down the pike here. remember, august can typically be a volatile month but now it's expected to be a little bit worse than normal or seasonal. the idea was or the hope was that the summer would be quiet and some resolution would come from china, from the whole situation by the fall. that doesn't seem to be happening. that's fear, it's uncertainty, it's reflected in what you're seeing in the markets today. you can see dow down again 694 now, closing back in on that 700 mark. traders also saying it becomes a technical issue, when you breach certain technical levels, the algorithms start to kick in, that's when the selling gets even more pronounced. it's electronic trading that
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also plays a role in this kind of selloff. but it's broad-based, it's across most sectors. as a matter of fact, s&p 500, all the sectors are trading lower today. we have talked about this all morning. it's tech stocks, it's retail stocks, it's industrial stocks, it's hard to find a stock out there that doesn't have some tie to china, if not directly but tangentially. that's what you're seeing today. neil: thank you very much for that. danielle, jpmorgan put out a statement, you buy on the dip. it didn't exactly say the exact point. but you know, we were mentioning earlier, you have been richly rewarded for not panicking in the middle of these trade related selloffs. pretty much all the time. it's not immediate but if you ran away from the market, you would regret it. what do you think? >> i do agree. i'm all about buying the dip but i need to focus on hot industry groups and sectors.
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just as she was talking about, yes, right now we kind of have a broad-based selloff but there is one area of the market i have been looking to because of the high levels of consumer debt especially, credit card companies. you have companies, mastercard, visa, american express, these are companies that when they do dip, they rally like the phoenix. for me, i have -- neil: indebtedness is getting worse, that would be counterintuitive. maybe that's the strategy. >> right. for me, i'm looking at those credit card companies, those have been very strong. also, the cloud computing industry has been very strong. that's one of those that typically will rally on the dip. neil: unless you are capital one and send all your financial information to the cloud. all right. lindsey, i know this can be sometimes chicken and tea leaves, the point at which people would buy, below a 50 day moving average, 100 day moving
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average, whether an inverted yield curve at such a level for such a long time that triggers something. are there triggers that you look for, what might they be, up or down? >> there are certain especially economic indicators in addition to the yield curve inverting that could signal that things are getting either really bad and potentially bottoming like consumer sentiment, home sales is another one we keep a close eye on and the leading indicators index. you have seen all these show somewhat i would call yellow signs of softening and weakening but not at the dramatic level if you look at past recessions, where we have seen these indicators before. i think the economy is still chugging along at a slower rate than it was before. neil: that's an important distinction. not reversing, just growing slower. >> exactly. things are still moving forward, but what jackie brought up earlier is how is this going to impact earnings for corporate
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america because i actually felt pretty good after second quarter earnings. we are still in the second quarter earnings season but you hear a lot of industrial companies talk about how they are able to manage the tariffs and to me, that was, you know, i felt like okay, we can handle this into the end of the year as long as there's no escalation. now we are seeing escalation. no one is really putting in their guidance that there's going to be an escalation in tariffs. neil: don't you think some of them that do telegraph that are covering their you-know-what in case something hits the fan? like the weather used to do about the weather. it was a rainy month. they never credit a sunny month. >> or the shift in easter, christmas. neil: right. you can't do that. joe, does the president worry that housing hasn't benefited more given the low interest rates, or that that would be an immediate beneficiary just on the surface, and it's not? >> yeah, it's a good point and something we really haven't
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talked about, how the housing market -- neil: raise it with him. i will be curious. >> i will. i will. but yeah, the housing market does indicate a lot and especially, we see certain demographics struggling to even purchase homes and how much that drives it. but to your point earlier about investors not panicking, i think there also is sort of that same mentality in politics, where you see the trend line of the president's poll numbers essentially holding flat and we have gone down this playbook time after time where we always think this is going to have a serious impact on his popularity, on his potential re-election and it never seems to pan out that way. i think the mentality is the same for both investment and political investment with the president right now. neil: good point. speaking of the president at the white house, blake burman, blake, has the president addressed what's going on in the markets today? i know tragically, he did talk about the shootings and measures he's going to take to deal with that. but precious little about this. what do you think?
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reporter: the white house obviously has been focused today on the shootings from over the weekend in dayton, ohio and el paso, texas. the president we heard from him at 10:00 this morning. but that hasn't stopped him from taking to twitter and reacting to what has been going on with the flurry of news coming out of china today. we have seen a few different takes from the president, first off he's called china a currency manipulator. the treasury department has not officially gone to that length just yet, only keeping china as one of the handful of nations on the watch list at this point. the president has had an interesting relationship with china and whether or not it's a currency manipulator. that was his take during the campaign but in the early months of the presidency, he backed off that conversation as he was trying to cultivate a relationship with xi jinping, the chinese president. but now he is fully back on that train, saying see, they are devaluing their currency, this has made them a quote unquote, currency manipulator. the second take from the president is we see china devalue their currency, china is
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paying for the tariffs, as he said in the tweet, that the u.s. is not paying for the tariffs. however, as you know, that is not how tariffs work. when chinese products come from china to the u.s. that have a tariff on them, u.s. importers pay those tariffs, then companies have a decision to make. one, they either eat the cost, two, they either pass those costs off on to the consumers or three, there is some sort of mix. the companies pay part, the consumers eat the rest, and you get that mix. thirdly, now we are learning from the commerce ministry out of china that china related companies have suspended purchasing u.s. ag products and china is also threatening to reup tariffs on ag products coming into that country. so today, we have heard that one, china is devaluing its currency and now, two, companies that are related to the chinese government are going to be holding off on ag purchases and
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as you know, that is something that the president has wanted, that china in his words, china promised a large scale ag buy but china did not follow through on that, and now we are getting even more confirmation from the commerce ministry over there that they might not go down that road at all. i would just add to that, neil, remember, the president has touted $16 billion -- a $16 billion bailout package for farmers. there was that first package of about $12 billion or $13 billion, i believe, a second one of $16 billion and it's not expected there's going to be a third one but it wasn't expected that there was going to be a second one either. so if there's this halt of ag buys, might there potentially be a third one down the line? as it seems like every time i have come on to talk with you over the last week, we end by saying where is the glimmer of good news in any of this. it's really tough to find. neil: what you do for one, you
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better do for the other. the shoe guys want that. reporter: it goes -- neil: they all want the same thing. reporter: remember, it was republicans who were very critical of the obama -- in the obama administration of picking winners and losers. and you could very well make the argument, make the case, that by bailing out the farmers, the trump administration is engaging in picking winners and losers, in this case, the winners being the farmers or the ag community, though the winner i would use that term very loosely. neil: all right. you will still get a presidential tweet but nice knowing you. thank you very much. charlie gasparino with us right now. charlie, just as we were going to you, moody's put out a statement that these u.s. tariffs are going to weigh on the global economy, be negative for technology among other sectors including manufacturing and retail. your thoughts? >> kind of burying the lead there. we know that. the rating agencies react almost
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after the fact. let's be really clear because i heard some of your guests talking about how in the past, if you bought on the dip, you did very well. if you took the dow or even the s&p over the last, say, 18 months, so almost two years, when this trade war started happening, it's about flat. it is not up. you did not do well buying on the dip. neil: you had some points where we were almost in bear market territory. >> so maybe then, if you were going to trade in and out of stocks but most average people, most of our viewers, you know, don't do that. neil: you don't think this is market friendly? >> no. not only that, you did not do well in stocks over the last 18 months. i mean, maybe better than bonds, i don't know, but it's not like you have been rewarded that the trump market has rewarded you, if you just stayed the course. it hasn't. neil: joe, you disagree with that? >> look at the chart. look at the chart. >> since november 2016 the numbers -- >> but that's different. that's different, joe. neil: he's saying this is the trend. >> totally different.
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>> i understand, but we knew there would be some volatility and some damage done. i think in the long run it will pay off. >> we did not know that. neil: what are you saying now? what do you think happens now? >> well, if he keeps going this way, we are heading down -- you know, listen, he already has a 2% gdp print in the last go-round. i mean, you have to see how this impacts gdp. if we stay -- if we dip below 2%, the markets are going to go down because then it's definitely hitting corporate earnings in a major way that the tax cuts and the regulation cuts won't make up for. neil: let me bounce that off lindsey. the latest, last week at this time we were running at 6.5% clip earnings year over year, and now i think it's around 2.5, maybe 2.7%. i'm sure after today it contracts a little more with more earnings announcements but who knows. but they're still expecting when all is said and done a contracting quarter which was the betting going on.
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what do you think? >> it depends whose numbers you're looking at. for the third quarter, we are looking for a contraction, i think it will be probably about but i think more importantly, to charlie's point, when you think about 2020, you are looking at almost 12% earnings growth. that's assuming that we get past all of these tariffs. and things return to a normalized environment. that's the big risk. neil: that's the bets are off at that, right? >> well, again, i just go back to the various different sectors because if are you looking at it as a whole, earnings growth as a whole, that's very important but if you focus on specific companies like microsoft, for example, that show an excellent quarter over quarter, year over year growth and they really don't have very much of an impact on china. for me, i'm looking at specific companies,specific sectors. neil: but buying market aggregate, those days are over? >> yes. >> the problem with that, listen, yes, if you buy specific sectors and you can figure out
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which is going up, which ones are going down, but most people don't do that now. most people are in index funds, etfs, that buy broad averages and you know, we don't have a nation of stock pickers out there as investors. we have a nation of people who bet certain broad indexes and indices, and i think that's where this gets really hairy for the average investor, like where do they put their money -- neil: isn't that strategy better than picking individual stocks, in the longer term? >> long term, yes. theoretically. but long term, we are all dead. neil: what do you think? >> look, i think that you know, when you think about etfs, you can buy individual different sectors or you can buy on different trends, whether it's, you know, cloud computing or if it's something that is going on with the soybean business that you want to short that etf or something. neil: do you in the aggregate tell your clients or your firm that look, sit tight, hold, don't add, don't subtract?
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what are you saying? >> we're in it for the long term. neil: what's the long term? you get to my age, long term is breakfast. >> we're in it for 12 months to three years. neil: okay. >> we think that you should wait it out. neil: you are all young. >> i know charlie talked about the two-year trend not doing much but that's better than if you were in different neil: charlie, what do you think of that, people say step back, step back. time is your friend? >> that's logic until you see the markets. i remember when the markets hit 6,000 in 2009. i was over at brand x reporting about that. did i think it would triple in the next couple of years? no. but, long-term if you kept your money, if you bought dow 14,000 in 2007, late 2007, could with stand the pain of going down to six in 2009, you made a lot of money. problem people don't have that type of risk tolerance, bills to
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pay, net worth is involved in the market, it take as huge hit, if you're less wealthy, you spend less. you get what i'm saying. hard to think total long term. i will say this though, if you look at anything with the trump economy, the one blind spot is this trade stuff. it is preventing the market going to 30,000. it is one thing preventing long-term 3% gdp growth. if you don't believe me, all you have to do is have private conversations with mick mulvaney, larry kudlow, steve mnuchin, everybody but peter navarro. they will tell you the same thing of the problem is person who has trump's ear on china with this trade thing is peter navarro. i like him personally and he is ideologue. you called it this weekend, when donald trump says that you china is paying for this, that is peter navarro talking. you called it and chris wallace
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called it. it not good to have a guy like this making policy on something that is so existential to both our economy and our markets. he is an ideologue, one that is way out there on the spectrum. neil: this is the effect of charlie, he speaks we had another 100 point to the selloff. >> nice. neil: we're down 760 points. what do you tell clients, danielle through this? quiet, all 30 stocks getting hammered? >> it is completely dependent on their time frame. we trade options. neil: oh, wow. >> the put/call ratio is very high. neil: they're overdoing it? >> exactly. neil: stick with it? >> buy the dip. at some point we'll have good news. >> if you feel uncomfortable increase the cash position. take advantage of some gains in
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the "fang" stocks. i wouldn't sell entirely out of the market. neil: what do you think, joe. >> trump has two years. neil: a man of great faith. our panel had no choice but to stay. they stayed. we'll unhook them from their seats. to you, charles. charles: thank you, neil. this is charles payne and this is breaking "money". "making money." as the trade war morphs into a more potential currency war, which china allowed to sink to the lowest level in more than a decade, below that 7-dollar per dollar mark, we're all over this, we'll have no commercial breaks for you this is very special coverage at a very special time. we have amazing guests to go through this. president trump speaks to the nation after a weekend of mass shootings left 31 dead. we'll go live to the white house coming up. all t


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