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tv   Making Money With Charles Payne  FOX Business  August 5, 2019 2:00pm-3:00pm EDT

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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 that and so much more on
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"making money." ♪ charles: reports are out china is port he hadly spending tariff exemptions on u.s. farm goods with some goods suspending purchases of american agricultural products. this comes hours after china devalueded their currency, allowed it to go lower, softening blow from the trade war, sending our markets into free fall. edward lawrence is live eight while house with more. reporter: this is escalating. the chinese commerce ministry is confirming that china will not buy anymore u.s. agriculture. they are confirming they will suspend rollback of tariff on u.s. agricultural imports on china. as president donald trump pointing to the fact that china devaluing its currency. he called china a currency manipulate tore four times in four different tweets. i want to point to two tweets
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the president specifically saying earlier today, quote, based on the historic currency manipulation by china it is even more obvious to everyone that americans are not paying for the tariffs. they're being paid for compliment of china. the u.s. is taking in tens of billions of dollars. china always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers wages, harm our farmers prices. not anymore. the yuan fell below 7% for the first time in 11 years fence the dollar. now a spokesman for china's central bank said the drop happened because of u.s. protectionism and the impact of 10% tariff, the additional tariff the president wants to add on an additional $300 billion of chinese import into the united states which the president says would go into effect september 1st. white house economic advisors say you need to keep the pressure on. >> what are we willing to pay
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for the chinese to stop hacking our computers and trade secrets? what are we willing to pay from them stealing our intellectual property, forcing technology transfer? i tell you the reason, there is number of reasons why the president decided to take the action he did. he has always had the door open to negotiations but when we don't see reusable progress, when they renege on the deal, they don't keep their promises. reporter: that is what it is about their promises the president said he is prepared to have the new tariffs at 10% for a short time, hinting it could go to 25% or go away, depending on what the chinese do. seems the chinese are not backing down, during the last face-to-face talk, chinese sources say the u.s. was told none of the concessions the u.s. says was removed from the agreement would be added back. also chinese according to sources told the u.s. delegation that they would not change their laws based on any trade agreement. u.s. trade representative robert lighthizer and treasury
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secretary steve mnuchin expect the chinese delegation to come back to the united states in september for trade talks here in washington. we'll have to see if the chinese hold true to this or if this escalation is causing friction that causes those meetings to just go away. we'll see. charles? charles: thank you very much, edward. what are the risks in beijing, what are they running into while they try to weaponize their currency against the u.s. dollar? with me, is the author of coming collapse of china. you joined me saturday. we talked about currency devaluation. it is here. would you say it's a sign of strength or perhaps a sign of weakness. >> i think this is a sign of weakness. charles, xi xinping is risking everything, not just his currency but his banking financial systems, his economy, his political system. go back to 2015, 2016, net currency ow flow china time was
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maybe 2.1, $2.2 trillion. charles: trillion with a t. >> trillion. charles: outflows, going anywhere but china? >> they stopped it by imposing draconian capital controls. some were unannounced. they stablized currency. they were able to get through. this is a last resort. i think it shows xi xinping is desperate. >> their economy is certainly slowing. this won't necessarily help that. their stock market is vulnerable. it peaked in 2015. down 50% since then. a lot of chinese corporate debt in dollars. to your point, they are risking some of their largest corporations not only have poor or weak economic backdrop but maybe having a tough time now that the dollar will be so much more expensive. >> 2018 and this year we've seen defaults already. clearly companies are now facing a slowing economy which may be a contract economy they will have a tough time getting back
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dollars to pay back foreigners and also the dollar debt inside of china. this will have implications that will really ripple through the chinese banking system. we had the shock takeover of a chinese bank couple months ago. we're having couple ones right now. charles: they orchestrate ad bailout of. it wasn't a too small of a bank, 50, $60 billion of worth of deposits. i want to ask you. i don't know that it is debate when i hear people say the consumer is going to pay anyway, it doesn't make sense the because markets wouldn't be down, china would be upset, if it was all about the american consumer absorbing this we wouldn't have this conversation. china has lost 2 million jobs already because of this. this is them taking a last-ditch stance i guess to your point. they know the risk but they're desperate enough to take it. >> i think what is happening inside of the chinese political system right now, xi xinping is not able to force a consensus on any sort of arrangement. charles: i thought he was a dictator? >> he is also a dictator.
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he had unprecedented power but he also had unprecedented accountability that was in 2018 everything beijing's way. but it terrible in 2018 when china is suffering all sorts of problems, for instance the economy, hong kong, political. xi xinping is getting blamed. he couldn't force through the trade deal he came through in april. they withdrew the concessions in the agreement they forwarded early may. we have seen some other hints of xi xinping not getting his way. charles: hard-liners pushing hill on other side, chinese hard-liners? in other words who might have marked up the deal because obviously the negotiators working on perhaps with president xi come to deal with americans, we had the deal, 150 page, seven chapters. more or less everything mapped out. someone looked at this and or group of people looked at it said no way. >> the group who looked at it no way, heads of state enterprises were going to be disadvantaged
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like this. xi has created a lot of enemies, if he falters he knows the enemies will go after him. this matter in hong kong which is on his plate. charles: you say the state-owned enterprises won't benefit, is that euphemism they won't be able to steal anymore? >> that too but the way the system was operating they were favored. they got subsidies. they had industrial policies that benefited them. those were going away if there were a u.s. trade deal. charles: hong kong, it stands to reason probably the yuan, chinese currency would be under pressure anyway considering the scenes coming out of hong kong, now this yep strike a general shutdown. what do you make of it? >> this has gone well beyond the control of china and carrie lam, the hong kong chief executive. you have kids in the street who are willing to die. they're now talking not just about autonomy for hong kong. they're talking about independence. they're talking about the end of communism on chinese soil. this is escalated well beyond what we saw in april or even in june. charles: right.
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>> so right now beijing is in a lot of trouble. you have got tear gas through all of hong kong. the airport was partially shut down, about 200 flights canceled. i don't know where this is going, clearly at some point xi xinping will have to send in people's armed police or peoples liberation army. charles: seems like they're softening the ground with rhetoric from the carrie lam and pla. gordon thanks very much. >> appreciate it, charles. charles: the market drops for the fifth day in a row. s&p down for the the sixth day in a row. the questions are should we look to buy here? to make sense of selloff, like to bring in fox news contributor jonas ferris, bahnsen group, david bahnsen. we saw each other saturday, the idea these tariffs, china is in unique situation, old school, never use tariffs because they are a bad actor. we don't have a real honest to goodness trading system with
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them, but now that it is being ratcheted with the currency war, how do you feel? >> okay. first of all i still think the trade war gets overplayed in the markets right now. in actual dollar terms -- charles: 10%, $300 billion, drop in the bucket to 20 billion-dollar economy. >> the corporations will one way or the other directly, indirectly pay tariffs, that tariff will not add up to savings in the corporate tax cut. it will negative exceed that savings. obviously some companies are hit harder than others in the tariff war. that doesn't make any sense. that said how does it affect -- down take a lot to panic a stock market that ran up for 10 years. crisis over soviet debt default, over the thai currency defaulting. if currency goes down because of
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trade war we started they're losing more than we're losing it will have ripples across the whole world. interest rates are going down. why foreign stock markets in europe going down as much or more than ours. it is not, oh, we did a trade war, our economy can't handle did, it is their economy canned handle it, the global economy canned handle them going down, major buyer of commodities, could be number three or two. charles: contagion jonas talked about, with currencies. this spark as flight to the bottom. vietnam, other countries benefited from the tariff battle. they will not give up the gains by letting china's currency being less valuable than theirs? >> no, they're not you know who else is benefiting from all of this are i think the democrat sitting back, saying hey, i thought this was supposed to be helping in people in ohio and
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michigan and wisconsin. we're simply not seeing that. i really believe that we have a significant substantive issues with china around intellectual property theft that have to get addressed and i have said to you, charles i think the president is doing the right thing to stand up to them. but the tariffs themselves are not working. the idea it is only $30 billion, that is the fourth round of tariffs. if we go aggregate to the beginning of the total amount, we can directly chase the collapse of business investment over the last 18 months. the collapse of cap-ex, industrial production. i think that as a forward-looking kind of leading indicator into business investment which is what president trump did such a good job in the first year-and-a-half of his administration, stimulating, it is very directly being impacted this that is my concern the next year wherever
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this thing is going to go. charles: most of the met tricks measure economic success, shows states in the midwest done extraordinarily well. you can argue that the many have done very well, many are on board understanding what the fight is about, if you don't use tariffs i don't want to go back reash this too much, it is what it is what do you use? wto is old antiwaited toothless agency and diplomacy never works with china? >> i would agree with you the unemployment numbers have been stellar. i'm trying to protect that. i'm trying to not undermine it. they are ultimately a lagging indicator. business confidence leads to business investment, which leads to productivity, which leads to wage gains, labor gains. that is a cycle we've been benefiting from. if that reverses the wage gains
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and labor gains are what suffer on the back end. i don't think any economist would disagree with that. so up to this point i'm very optimistic about how the laborers and a lot of lower income brackets have done in this economy. as far as what the vehicles are that could be used, i agree with you, something would take us a long time to hash out on your show, charles i don't believe anyone can say it looks like it is working. that china is ready to cry uncle. they're fighting this in a different way than pete navarro expected. charles: although, jonas, we had gordon chang saying the currency, letting the yuan dip is sign of weakness. they had a major issue with capital flight. we know they're losing jobs. we know their economy is trouble. it is a war. i don't know of any war. i looked at last 200 years in this country, there aren't many wars we won in less than a year.
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there are many different wars. it might take a different kind of war to win. we might have to change course. i want to ask you about the role of the fed here on out? >> all wars, boeing sides are going lose. it doesn't mean you won't have a global meltdown if china goes down. charles: we don't want them to go down? >> no. we want them to trade like germany does. germany doesn't rip us off. they're a fair trading partner. that said, could it lead to serious problems? i don't think the fed took this into consideration this would be a slowdown. personally interest rate action is driving market both in the crash last year. now we can't get away from zero interest rate globally. fed raised rates to 2 1/2% and barry caused a crash. in past recessions, is where we're going.
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you can't get out of it. real estate prices, all inflated stock prices come down. it's a scary situation. there is no endgame. there is no way out of it. charles: market is looking at three. many so folks are now talking four cuts between now and end of the year. we'll see where that goes. jonas, david, appreciate your expertise. thanks a lot. the dow falling 700 points on trade uncertainty, mixed with unusual thing like currency war. we have not talked about this in a decade. our very own jackie deangelis on floor of new york stock exchange. she has latest on how traders are reacting. jackie. reporter: good afternoon, charles. you can see market reaction is not great. 738 point down on the dow. we are off the session lows we saw before 2:00. what i am hearing on the floor, the concern, back and forth, tit-for-tat. we had had earnings come out. nobody really said, no company said they saw huge problems in
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china or that they were necessarily paying more or having difficulties but this is where you start to potentially see that happen. that is what people are really worried about going forward. china made a bold move, pressuring, devaluing the currency today, to basically, as president trump said, try to, that their currency manipulator. making u.s. goods more expensive in the marketplace. that can have a chilling effect on sales. you have a little bit of a double-whammy, when you're looking not only happening with the china piece of this, that frightens people. they're headed into the bond market, into the 10-year yield. interest rates are going down. that yield spread is widening as a matter of fact, widest since 2007. we were worried about a recession, inverted yield curve says it could be coming. on a day like today, that's when people start to bet a little spooked. on top of that, you have electronic trading at play here. when you start to hit certain levels on the way down,
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algorithms kick in, selling builds on itself in terms of momentum. august can be a quiet month. maybe not the best month for trading. traders are expecting it to be pretty volatile especially as the president has said in september those talks with china will resume or white house says that. there is still no resolution to this now trade war, full-blown, what it seems like especially with china's retaliation today. charles: jackie, thank you very much. we'll come back down to see you more often as the session goes on. the dow is down 750 points. how can the united states fight back against china now that it chose to devalue its currency? many of you heard the fed has the wherewithal to do it, what can they do to keep or mitt fate what china has done with respect to the trade war. thanks for joining us. i find it interesting, we go
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back a week ago to the press conference with jay powell. i personally thought he was taking a shot at donald trump. i thought he talked up trade so much. >> yeah. charles: compared to all the other fomc gatherings, all the other q&a sessions where he said the trade situation was worrisome but diminimus to the impact economy. >> right. charles: he made it seem like much bigger of a deal. it emboldened china to certain degree and. >>ed president trump. >> he calling out to the fed. president is doing exactly what you're talking about. look at situation you put me in. with the economy is strong. you want to pick a fight from position of strength. that is where the country is. president trump is trying to unravel 25 years of economic and foreign policy towards china. it will take more than couple days of market being down
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beneficiaries have been globalists and corporations. they're saying that the president is wrong. there is this fang concern for the consumer. and i don't know. i understand if you don't want profit march against to get hit. that is all it is profit margins getting hit. >> that is exactly right. president trump was not elected by them. he was elected by the people. we outsourced manufacturing during that same period. saw saw what the people did in 2016. they rised up to vote for president trump to take care of this issue. that is what he is working on. it is actually working. china's gdp number, lowest in 26, 27 years. they have demographic issues and uyghurs and hong kong. this is not retaliation. this is desperation by china.
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charles: currency devaluation. >> correct. >> what would be the next move? seems like they played all their cards. devaluation, farmers, what would be the next move? >> what they're trying to do as president pointed out wait him out of office. they're crossing their fingers someone else in white house will go back to the bipartisan a piecement of china like republicans and democrats did before president trump was elected. i think everyone has their hair on fire. they need to realize it takes time when you do the same thing for 25 years. you do it when gdp is strong, unemployment all-time lows, from a position of strength we can bear this, they can't. charles: do we do anything to counterthe valuation of the yuan? or let negative aspects of it within china, itself, force china to maybe make some adjustment? >> certainly the latter. as you and i spoke i was against the fed lowering rates as we talk. i don't think we should stay pat on monetary policy. i think we've overdone that.
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you want to keep dry powder when we're in a downturn. people need to stop saying we're in one, we'll talk our way in one. unnecessary to do anything with the fed. let the president's policies hurt china. we had no inflation on consumer goods for a decade. charles: are you concerned the opposite though? last week, i think it was thursday friday, we had ism manufacturing, prices paid collapsed. today the ism services number. prices paid, not as worse, as bad as moving, but down again. the number missed consensus seven out of eight times this year. are you pourried about potential inflation? if that is the case should the fed do anything to get ahead of that? >> fed needs to stay pat. they talked their way out of inflation. they want to say deflation, no inflation, now the sky is falling because consumer prices will go through the roof. it is inconsistent and illogical. some of those articles appear on
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the front page of the same paper. charles: great point. >> appreciate it. charles: market is nosediving today. every major index is tumbling the price of oil is tumbling. china's currency is faltering sharply. escalation of a currency war, coupled with a trade war. joining me, phil blank caught toe. thanks for joining us. >> my pleasure, buddy. good to see. >> generally you're the voice of call in owl of that. are you concerned, are you concerned about the direction at all about this battle is taking? >> remember in the past it talked about this will take years. the idea of getting china compliance is not an overnight situation. for that reason it had me concerned about the market this selloff almost 4% now isn't a big concern yet. this is a long process we'll have to work our way through. probably more selective where you make the stock bets than you have anytime in this rally.
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charles: having said that, are you looking to be more focused domestically? companies with concentration of sales in america? i know coming into the week overwhelmingly companies with more than 50% of the sales into america have seen revenue, earnings growth explode to the upside. conversely, those companies that do more than half of their business outside of this country really struggled this earnings season? >> no doubt about it. when you think of the train wreck in europe. they have negative interest rates. that is not a positive situation at all. china is slowing down, focus for investors, pivot to higher quality, pivot to where you earn income, focus on united states and focus on the consumer. day in the consumer of united states is feign fully employed, earning money, spending to support the u.s. economy which is why we're not recessing. >> we saw the june, consumer confidence number went down. it had a huge rebound in july. many are saying you know the reason it went down in june were
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the headlines. tomorrow consumers will read headlines, at least today, look at the smartphone, say, golly the market crashed. technically not a crash but if you're not in the market, down 800 dow points looks like awful, ugly day. will that curb that or mitigate that consumer strength you're talking about? >> i think it does a bit. 80% of the country's wealth is in 20% of the population. older folks are invested. days like this get them concerned. i would like investors pivot a bit. made a lot of money in the last 10 years. take profit, rotate to short-term fixed income paying dividend or higher quality, value oriented stocks. why? there is a fact that u.s. economy is little too reliant on fed waiting for another cut. let's be honest we've seen the earnings cycle slow down considerably. we're flat earnings. that doesn't give you around stocks, you want to batten down the hatches. >> value, is that euphemism for
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boring, unsexy? not facebooks and amazons of the world? are you saying that the campbell's soups of the world stocks? >> no. buy costco down 3%. buy walmart. fighting a good fight against amazon. costco pays a really nice dividend. consumer focused. make ton of money on credit card. they're a little expensive because they have had a great run. that will weather storm better than apple or something embedded hard because of tariff battles. focus on consumer stocks, verizon, walmart, something that will earn income based on strong u.s. consumer and you will be just fine. charles: phil we broke down 800 off the dow. we're down to the lows of the session. we know selling begets selling. highly unlikely, maybe last hour of trading anyone steps in right now. how do you measure potential downside when the markets get into free fall mode? >> the bad news we're now only up 1 1/2% since believe it or
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not last september at all-time highs. you haven't made a lot of money last nine months. what i would do is be patient. buy when people are fearful. let the market sell-off. let it absorb the 5 to 7% loss which we're probably looking at here. remember, september is a really tough month. going into late august, really volatile, election season, going on with china, this is not going away. wait for opportunities during the market selloff. look for the five to 7% correction. reenter with a calming effect. you want decent market volume and flat market. when the market flattens out, decent buying you see buyers come back in. charles: that is when viewers to make the move. phil, thank you very much. very concise. we appreciate it. >> my pleasure, thank you. charles: markets are hitting a six-month low as president trump blasts china's quote currency manipulation on twitter. based on historic currency manipulation by china it is now even more obvious to anyone that
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americans are not paying for the tariff. china has always used currency ma in inplace to steal our factories, hurt our jobs, depress our workers wages and. joining us is steve moore. >> well-said. can you name any country in the history of the world that got rich devaluing their currency? no. i mean just doesn't work. the fact is, in response to the tariffs, they're devaluing their currency which means that the chinese are bearing the costs of these products, these tariffs, not american consumers. i'm not defending tariffs. goldman sachs put out a ridiculous idiot report yesterday saying the american consumer is bearing whole cost of this. what are they talking about? if they devalue currency, something that cost $10, cost nine dollars. put 10% tariff on, china bears
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the cost. that is the math. charles: that is not getting to the point where chinese exporters have to lower prices anyway. they're talking to u.s. counterparts i will not pay dollar for lol doll. i will give you 90-cent. >> if chinese could pass costs on consumers they would raise prices. but they can't do it. charles: we wouldn't have the conversation. >> i get so angry, there is such a deficient economics here that is being discussed. now i don't think trump had any idea that the stock market would go off 1000 points from these tariffs. i think they're spooked over there at the white house. charles: really? he had to know the market would have adverse -- >> some of that. but don't think they expected this. "wall street journal" report is true. there was internal conflict on this, charles. larry kudlows and mulvaneys who basically said wait a minute here. this -- charles: they're more traditional its, more traditional its to economic orthodoxy being conservatives. they don't like tariffs anyway
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to be honest with you. >> true. charles: many conceded in this particular case, china we never had really fair trade anyway. >> that is where i am. i don't like steel tariffs or auto tariffs but you're dealing with a country, this is not a free economy. this is a totalitarian government. it is central planned. they have become a menace. we'll have to fight them one way or the other. my advice to the president has been look, get the best deal you can from now with china so we can go into 2020 with a strong economy. you get reelected. you spend your second term -- what worries me, charles, if it hurts economy, that hurts his chances of getting reelected. that has negative feedback effect possibly. charles: that article you referenced with the infighting, many are saying hey, you have peter navarro is the lone person in the circle arguing -- >> leaving out somebody. charles: lighthizer? >> donald trump. donald j. trump is not
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conventional free trade guy. he thinks like this. i had many discussions about this. he believes china will have to fold here because this, it is hurting our economy. it is killing their economy. but the problem we're not dealing with rational people in beijing. the rational thing for them to do would make a deal with trump, both economies would benefit. there is nothing trump is asking the chinese to do is unreasonable, right? charles: their goal to the world domination. >> i know. charles: relies heavily on the ability to continue to steal our intellectual property. >> that means that they, they are incapable of producing innovation and technology. maybe not. charles: at the pace that they want. they are capable. >> here's the thing, because they have no respect for intellectual property, thereth is actually hurting their own research and development. chinese companies are stealing from other chinese companies. it is bad for the world economy when you have the second largest economy in the world not
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respecting intellectual property rights, that reduces innovation, technology, research and development spending. it is bad for everybody. trump is fighting the good fight here, no doubt about it, but boy, this is painful. we've seen a trillion dollar loss in the stock market last couple days. charles: so far we've seen tweets, they revolved around currency manipulation. nothing about the next potential move from the white house. china has been very aggressive in the last 12 hours, manipulation of currency, removing exemption on tariffs on american farm goods. not buying more farm goods. some argue they really haven't been anyway. >> right. charles: feels like they're playing all the cards at once. >> this is escalating, no doubt about it. charles: it is escalating. the ball is in our court. >> i don't see trump backing down. charles: does the 10% go to 25%? >> i don't know anybody knows that question.
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i don't see trumka pit lating. known him. this is the epic battle of our time. this is the new cold war we're in for better or for worse. we can't lose. the worst possible outcome for those in the watching the stock market, worst possible outcome for america to capitulate. we can't give in to china at this point. we just can't. charles: you talked earlier about small victories before the 2020 election. felt like president trump was working towards that. even there, promises of buying more ag, stopping fentanyl, i think on those low-hanging fruit chinese reneged on. >> you're exactly right. that is frustrating to all of us. we're dealing with irrational people over there and that makes it really difficult to get a deal. apparently they're willing to hurt their own companies, their own people, somebody asked me earlier, this is so obvious they're hurting their own
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people. they don't care. this is totalitarian government, they want to keep power. just as there are many camps here about the right strategy there are also many camps in beijing. let's president xi deals with the people that want to make a deal. charles: no need for a pyric victory. >> you got it. charles: steve, thank you very much. oil by the way, folks, closing in moments. i want to go to price futures group senior analyst, phil flynn. a lot of factors with the price of crude, certainly idea that the global economy is going to slow even more as the trade battle ratchets higher, right? >> that is absolutely right. if you look at price of oil today, you can see by the movement it was totally predicated by what was happening with the u.s. china trade war. you know, because if you look at the rest of the world, charles, fee owe political risk factors
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are actually rising. iran taking a tanker over the weekend, threats in the straits of hormuz, yet the price was totally focused what was happening with u.s. china trade war. that is why we saw the weakness. interestingly enough the u.s. market was only down 1.74%. if you look what happened with the brent crude, it was down almost twice as much. there seems to be a lot more angst in europe from the fallout with the trade war than we're seeing in the united states at least at this point. charles: phil, what about other issues here. we've been so range-bound with crude oil. feels like the ability to ignore so many things, is there a chance for anything, surprise to kind of get the price up? or is it all really predicated on just what happens with the sabre-rattling, not just in the middle east but between the united states and china? >> you know, i think what could happen is, the demand surprise to the upside. charles, you've been saying it
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for some time. a lot of times we overreact to the u.s.-china trade war but if you look at the actual data, things are not slowing down as much as people think. when you have the global central banks around the globe stimulating economy, we might get surprised later in the year with a surge in u.s. energy demand. but you said it many times, the u.s. energy producers really provided a buffer against the risk shocks we've seen in the past. that is one of the reasons why the oil market is calm in a world that can be very crazy. charles: phil, when i, sidebar here, concha resources missed, prices realized for oil was a lot less than oil anticipated. the stock was down 20% in one session. the permian is the epsy -- epicenter of the oil miracle. is the permian basin still growing? >> there are problems, charles. there are big problems. i think we'll see a problem at
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the end of the year on barrels produced. they will find it takes a lot more money to keep it up at levels that are interesting. investors are saying we've had enough. start showing profits. you have proven you can produce a lot of oil but we want to you produce money. shale producers have not been able to do that. charles: no they have not. liquid natural gas, phil, seems to me the ultimate olive branch. china needs it, we got it. can that play ultimate role in the resolution? >> absolutely. charles, lng is the biggest energy story for this decade and the future. it is the bridge fuel to the future. china will need our lng at some point. even though it looks like it will never to up, we're at the bottom end of the cycle, five years from now we won't believe natural gas prices or lng was ever this cheap. charles: wow, phil, always appreciate it. thank you very much. >> thank you. >> folks we are in the thick of the worst market selloff since
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january. here to help us make some sense out of this, where maybe you could also make money ultimately, gibbs wealth management president, erin gibbs, and bubba trading ceo, todd horowitz. erin, let me start with you. i saw an amazing piece where spoke put out, amazing selloffs in one week, the following monday, the market gaps off tremendously. almost every time a week later market is up, sometimes up huge. hard to imagine looking at the dow off 850 points we could be up from where we opened right now. >> get the hockey puck scenario. charles: is that possible, between now and monday's close next week we could be higher? >> it is definitely possible because when you look at escalation we had back in may it, took a full month for the market to go down 7%. we have done half of that today. if you think we'll have the same reaction where we pull down valuations, we kind of go risk
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off really quickly, anyway five to 10%, it is a lot going on headlines, we see further escalation with devaluation of the currency, no we're not going back up, sort of going at the end of it, we don't see any increase in acceleration, in the trade tensions. yeah, we could see a break next week. charles: todd, often, headlines often mask earth issues going on you have been worried about the market all the time. potential value in the currency. i don't know if that is your modeling. you have been worried about other things? >> everyone manipulates currency, including ours. that is just a fact. you know that from the fed, they are always manipulating. overall picture was when
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consumer confidence got to record highs. go back to 2007 and 2001 see at record highs. what was the end result? markets have to take a breather at some point. we've seen some slowing. earnings have not been as good but they keep reducing expectations which makes it easier to jump over the bar. so why wouldn't everybody get excited? the biggest thing you had going everybody could only chase yield in one place. look at bonds, 100 year austrian bond, point 1/2? are you kidding me? greek debt that is cheap now. people are chasing money. those are concerns. we cannot continue to plow money in with reckless abandon because there will be a selloff. i think we're start of this. we'll see rallies. there will be rip your face off rallies coming. i think this is a start. from a trading standpoint i will be selling every rally that comes by. i'm buying for my long-term account. i bought some today. charles: what did you buy today,
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todd? >> facebook, apple. my hedging model can use a buy when it makes money on the way down and -- charles: you sound like u.s.-china trade thing will be wrapped up real soon? >> i think china is not the issue. charles: right. >> i don't think they're the issue. i think the the deal says markets need a break. we're going lower. we're in early start of recession in my opinion. charles: all right. erin, this is the worst session since january 3rd. january 4th is when jay powell came out and had his epiphany with the world, that wage inflation is not the same as price inflation which was a sigh of relief. it should have been the ultimate sigh of relief for main street. hey, you guys can get more than 3% year-over-year raise without the fed derailing this whole thing. many are wondering i got to believe that president trump and jay powell had a conversation today. we'll find out later. this is my gut feeling. what do you think the next move from the fed?
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do you think they say something, do something, indicate to the market, before the next fomc meeting they're on the case? >> he is being so much more communicative working on his communication skills with the public, since they specifically referred to global slowdown, global impact on interest rates, something as big as this, i would think they would want to comment on it. charles: he talked about trade a lot. i thought he was taking a shot at president trump. honestly anytime before that he would say trade isn't issue. impact is diminimus. we're keeping eye on it. this time it is the biggest issue. >> you don't much time talking about what is happening outside the u.s. it was unusual we spent so much time talking about what is going on it side the u.s. versus inside. we're receiving more escalation. i would think we receive comment on them. charles: todd, talk about the
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rip off your face rallies, we're breaking big time. i don't know how much you use technicals, when i see 50 day moving averages breached, by the way all the major indices closed there on friday, almost inevitable we touch or test the 200-day moving averages. not necessarily in a day. where on the dow side you can see before the market might take a stand? >> i would think you would be lucky around 2700 at s&p before you might see a rally. maybe a little lower. i think dow, 25,000. these are areas that well provide some support, provide potential rally. again those rallies will probably be most likely to be able to be sold than bought. there are issues here. we'll see some crushing. once we realize that the fear, is really not fear of a china trade war and other things, the markets are ready to go down. i think that is what you see, a continued pushdown. you will see rallies from
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200-day moving average. that is almost automatic. markets go to 200-day moving average, they bounce up. like 200 day selloff. i think we'll see that. overall i think they will go much lower. >> i tend to agree with todd, if there is something going on it is more than headlines. i'm not sure what that is. i think inflation is issue. ism number, prices paid was down a lot on the service side. last week the manufacturing prices paid to me is inflationary death spiral. i think there are issues don't get talked about a lot because of headlines. are there other things you're concerned about beyond the usual suspects? >> i talked about how the large caps are very, or were very highly valued because there is no other place invest. interest rates are going down, large caps overvalued versus your small, so there is a definite concern. we're going through much slower earnings growth. and so i think that, we have had concerns. we've known that we've been
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trading at peak valuations for the past four weeks. we're not seeing really stellar results when it comes to corporate profitability. all of this adds up to, if there is concern, that much more likely to go down. charles: all right. two of the happiest guests i ever have, erin and todd. two of the smartest for sure. stocks started to plunge after yuan fell below what many consider political levels 7 to the dollar. that china is actually devaluing currency to counter tariffs. it will minimize impact of tariffs president trump says will go on additional 300 billion of chinese imports set to take effect on september 1st. i want to bring in a strategist chris phelps. >> thank you very much. >> market reaction going back to that tweet today, is it it
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justified in your mind, 10% tariffs on $300 billion in goods and services? >> when september comes, may incrows the tariff rate. i think challenge will be you don't want to send two signals to the market you may raise tariffs again. certainly want to come down to a glide path. i strongly suspect, i served in the administration, served in the cabinet at department of treasury, worked closely with the folks negotiating these trade agreements and i strongly suspect you see some challenges, some domestic challenges both here and in china are trying to correct. hard-liners here in the united states. hard-liners certainly in china are putting a lot of pressure on their domestic leadership, on our president, our administration, members of congress, of course the ruling party in china. i think we may see yin and yang going on if you will between the two markets to hopefully will
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get to a place you can land and yes on comprehensive agreement but until that time, obviously there will be bumps in the road. this president certainly will, proven time and time again he will raise tariffs. charles: chris, who has got the most important voice outside of president trump's own voice? is it navarro? is it light highser? is it mnuchin? is it kudlow? who might be able to pull the president aside, hey, let's work back channels to see if we reverse some of this, because its ratcheting up where it will scare people. >> what he typically does, puts very important and very strong personalities together and let's them battle it out, he be the one that makes the ultimate decision. from my experience ambassador light highsers, secretary mnuchin, larry have strong
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voices. i respect all three of them. they're fantastically good folks in the administration. they all have level-headed view of this, and kind of a longer view of. certainly they will react to the markets. ultimately at the end of the day, we want comprehensive agreement, good for united states and consumers. there will be some challenges ahead as we go through the machinations of negotiations and each side pulls back we certainly see the chinese pull back -- charles: let me ask, kristin you're not very surprised how the has played out so far. >> not at all. charles: seems like everybody else is. >> i've been doing trade policy for a long time, back four presidents. we had a strategic economic dialogue president clinton started where chinese would come over to the united states and try to negotiate something. would say the right things but never follow through on commitment.
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that followed through under obama and bush. and now we have president trump. president trump has taken a different approach. keeping chinese feet to the fire of course, making sure they discipline each of their commitment. when they choose not to make the commitments, he proofs there will be consequences. i'm hopeful this different approach, new approach may ultimately yield a deal. reality i'm certain in folks in beijing, powers that be in beijing are trying to make a decision, should president trump be reelected or not? when is the best time to cut a deal with the united states. everyone can agree, chinese economy cannot deal with six years of absence of american consumers. if we deny a chance to our markets that is not sustainable. charles: not just the u.s. consumer, as each week goes by, more and more businesses take the supply chains out.
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they will not bring them back. this is very dangerous gambit. we have less than a minute to go. you anticipate more action that could pressure market near term before we get a long term breakthrough? >> i think you do. in every deal there is always a some equalibrium settings that has to go on in each of the economies. i think we're seeing that now. i think we should all take a deep breath. allow folks negotiating this, who are level-headed to do the right thing. charles: right. >> and i think we'll get to a good spot on this. charles: chris, appreciate your insights. >> thank you. charles: very, very different but freight because i don't think many people know what you know. i appreciate you spending time with us. >> thank you. charles: breaking news, a gate house media buying gannett. the industry declining with growth of print editions. they will have more than 360 daily papers in the u.s.
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dow down more than 800 points. close to 900 points. continues to be pummeled by all uncertainty. go back to jackie deangelis on floor of new york stock exchange. jackie, any talk of stepping in, buying the dip down there? reporter: no talk of that right now, charles. dow industrials, nasdaq are on track for the worst day of the year. we have the tit-for-tat with the chinese striking back and currency move as well. the question traders have is, what impact will this have on u.s. corporations and their revenues and profits. what is president trump going to do next? does potentially step back, throw a punch and weaken the dollar to fight back? do we get into a full-blown currency war here. there is uncertainty in the market. there is fear in the market. that explains why you're seeing this selloff on the dow now at
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861 point. we're seeing red across the board. every single stock in the dow which is nice composite of all different industries and sectors, s&p 500, all those sectors in the red as well. tech is being hit hard today. retail is being hit hard today. industrials, financials. you're seeing a flight to safety, you see yields compressed. this this is sort of all encompassing market. the question has, where do we go from here? what happens next? august should be quiet. doesn't look like it is shaping up to be that way. charles: summer doldrums don't look so bad, do they? reporter: not exactly. charles: jackie, thank you very much. markets pushing further into the red as we head into the final hour of trading. dow, s&p 500, nasdaq are on pace for the worst day of 2019.
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anyone in the market, look at day like today, you have to put together a list of something to buy. everything is down. emotions driving this as much as anything else. where do you start to see support for this market, jonas? >> was making a living ins market. [laughter]. charles: i shouldn't laugh but but listen down 850 points. we were down big last week. no doubt a part of this is emotionally driven. a part of this algorithms. a lot of this, this is where we get oversold markets. >> that was one last year, i was buying the dips. i'm not gung-ho buying dips. what is scaring me about this one, market down 1000 point, interest rates are back down to pre-trump election levels. when trump got elected wasn't just stock market took off but interest rates took off. inflation would come back,
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growth would come back, like the good ol' days. that has been the case since he has been elected. inflation was back up, now we're back down 1.75 on the 10-year. great if refinancing mortgage. we're going direction of europe and japan. that 8 '80s market we were in. charles: where would money go, erin, if it is not in equities? what is more attractive place for money to go? >> gold, cash. charles: what about bitcoin? it is up huge? >> i wouldn't recommend even more volatile type of asset class versus your equity markets. if you want to really be in equities, obviously defensive, real estate, utilities, safety plays they're down the least. they're holding up relatively well compared to the rest of the markets. i'm saying this is not the day to buy. charles: certainly day is not the day.
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you say, hey, now to put together a list, whatever that bicycle is, it is different for different people, you have something you can leverage. >> what i intend to do, i think we're going to an interest rate environment. i think you can stay in long-term bond until 1% on 10-year. i think we'll hit it. i think it is collapsing. i would then move into stocks, not yet. i would look at foreign stocks. foreign stocks are falling as much or faster than our market. dividend yields are very high abroad. if we have global deflation, china goes down, you will lose money anywhere except maybe government bonds. however, if we start playing this currency war against china to the end,. charles: what can we do next? >> zero percent interest rates. charles: the fed would be one that would -- >> 10-year, they keep recycling interest payments coming into more 10-year bonds. they run the short-term rates down to half a percent. we're going to go. our currency false 10, 20%. you will make money in
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currencies that already have 0% interest rates, euro, et cetera. their economies are weak. you take a risk because it is deflation, but riskier bet but it will make a pop if our dollar falls in a war with china. >> i would be more comfortable going within higher dividend plays within the u.s. i'm a still a little skeptical about europe whether they pull out. charles: dividends are looking attractive for conservative investors. >> look at consumer staples, real estate. go defense. >> i would be concerned about any deflatable asset. anything that doesn't do well in deflation. that is lot of stuff. commodities, real estate. anything with debt behind it, needs growth to succeed. watch out for reits. watch out for anything. if we go back to 0% inflation. a lot of stuff is priced for inflation right now. if it
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charles: so we keep talking about the fed. we haven't heard from the fed. it's a long time now. it didn't feel like a long time but it's a long time before the next fomc gathering. right now i think the cme market, the fed watch is suggesting three cuts now but some folks on the street now even talking four rate cuts. you know, you get to the point where you understand being preemptive, you understand powell's desire to preserve the expansion, but that sounds more like desperation, right? >> yeah, if we're talking four cuts, that really seems extreme. but look, the chinese, we know they are very good at long-term strategies so the u.s. might just have to be ready for just an increase in volatility and perhaps over the next year, that's something we will be seeing. charles: it feels like president trump has already chivehinted i china were to make any kind of moves, he could put this trade move on ice or suspend it. wouldn't be the first time he's
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done that. i know that maybe wall street might start to get fatigue, twitter fatigue and the knee-jerk reactions, but that would certainly stem these kind of losses and you would find the market may be rallying pretty quickly. >> the president watches the mark market, but i think he's a little too -- in some ways i'm worried he's winning the trade war too much. i think the danger is the chinese economy collapses, there's so much contagion from that, just like little things like tesla just built a $2 billion factory in china to sell expensive cars to china. they are not going to sell any cars there if their economy collapses in china. then they are going to go broke. then the debt they took out is going to default. then all the funds that own that are going to go belly-up. the contagion is so epic when a country that big goes down. trump is not going to back down to win an election because he knows he's winning basically. their stock market is falling faster than ours. that's the danger that we win. that's the problem.
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charles: i always thought the idea was to win concessions, not to bankrupt their country. but you start to go tit for tat, that is a legitimate concern. >> certainly again, when you particularly look at any of the consumer stocks, and your consumer discretionary, most of their profit growth was expected to come from emerging markets like china. they are by far the most vulnerable to any type of recession in china. charles: you mentioned gold. are you in gold, you buying gold here? >> yeah. yeah. charles: you didn't -- >> not a recommendation. charles: people are nervous, people want a store of safety in this particular case. in a deflationary scenario it's hard to find that. i'm hoping we're not going there but i don't think enough people are paying attention to that. you know? downside support, anyone have any idea? it's a guess at this point? >> like i said, i'm looking for at least 7%, so another 3% from here, then re-evaluate. i would expect at least 7%.
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charles: thank you both very, very much. the dow is off 868 points. liz, you know, your hour always has magic. i'm not sure what's going to happen but i believe it will be pretty wild. we are buckled up to hang in there with you. liz: i don't look like henry houdini. i certainly can't pull off these tricks. harry. harry. charles: you with the help of a tweet. wink wink. liz: right. i don't have that power either, but while you were talking, the nasdaq lost four full percentage points. folks, we are looking at a major flight to safety as we head into the final hour of a very ugly trading session. forget escalation. china breaking out the heavy artillery in the trump trade war, sending investors sprinting to the exits. a loss of 895 points was the new low touched in the last ten minutes for the dow jones industrials. right now we are still down about 844, after china lobbed two key economic weapons across the pacific.


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