Of the leadership that President Trump has brought to this economy over the last two and a half years. Maria so if the economy is booming, why do we need a bigger cut than a quarter point . Well, i think, i think we certainly welcomed a 25 basis points cut, but what the president s been calling for is a level Playing Field with our trading partners and competitors. Maria and markets are very close to record highs on the heels of the cut in Interest Rates this week. I also had a chance this week to get the chairman and ceo and founder of the blackstone group, Steven Schwartzmans, take on Interest Rates in this exclusive sitdown. What thats telling us, that the Global Economy is slowing down. And Central Banks are trying to get in the way of that and stop the rate of decrease. Maria yeah, but is it going to work, steve in i mean, a lot of people feel like what is a quarter point going to do, and can Monetary Policy do anything more significant at this point . Well, i think it depends what part in the world. When you get Interest Rates so low, at a certain point they really dont have an effect. Maria exactly. In other words, if you look at europe, i dont know the exact statistic, i think its about a third of the countries have negative rates. I dont want even understand what negative rates i dont with even understand what negative rates are. Why would i pay somebody maria to hold your money. I could just hold it. [laughter] you know, most of those countries that are doing that arent experiencing any Significant Growth at all. So i think when you go below a certain absolute level, my own view, it just really stops being effective because, because savers dont get much in the way of rates, and the real problem is that Financial Institutions need some kind of yield curve so that they can earn money. If Financial Institutions dont really earn a lot of money, theyre not as healthy, they cant expand given the capital constraints on them. And if they cant expand, they cant lend you money. They cant lend somebody money whether its a company or consumers. And without credit extension thats pretty robust, countries dont grow. And so i think weve gotten ourselves into a bit of a, bit of a global trap. And the way out of this isnt continuing to lower rates, although you get a little shot in the arm. Its like going for a vitamin shot to a doctor, and you feel good evidently. Ive never had one, but, you know, for a little bit. And then it stops working. So youre going to end up needing, you know, fiscal stimulus. I dont know that qe works in any material way. Maria no. I think in europe youre talking about the need for fiscal stimulus like labor reform and, you know, things that are structural, not monetary. Right. Well, one is, in effect, simply running deficits. And the second is to have reform of your system. Which is hard to do, but youre going to need that. Maria and and can the u. S. Not be a part of this sharp slowdown were seeing across the world . I remember when we were talking about decoupling, i know you do too, its in your new book, but whats your take there . Is the u. S. Headed for a recession . I dont think so. The u. S. Has roughly 70 , maybe 72 in a consumer economy. Weve got roughly around 11 manufacturing. Manufacturings going down, theres no doubt about that. Its quite soft. But the consumer has the advantage of full employment the way we measure it. And so now were Getting Compensation for workers that are going up faster than inflation. And thats a good thing for workers. Maria yeah. And so typically when they get money, they mostly spend it. So that is a pretty virtues circle virtuous circle. So as long as thats going on, you wont have a recession. It depends upon what can shake the confidence of workers and consumers to spend. And usually those are geopolitical types of events that scare people. Maria does it bother you that capex was down in the last reading, this stalemate with china, capex is down. Managers are sitting on cash again. Does that bother you . Well, that would make sense if manufacturing is down. So that doesnt surprise me. Maria okay. And these things happen when you go into that cycle of decreased manufacturing. Thats global. But the u. S. Consumer strength is domestic. We own that, and thats a good thing. Thats our buffer today against a recession. Maria stay with us, much more of my oneonone with blackstone ceo Steven Schwartzman when we come back. [ applause ] thank you. Its an honor to tell you that Liberty Mutual customizes your Car Insurance so you only pay for what you need. I love you only pay for what you need. Liberty. Liberty. Liberty. Liberty. Tv aas many safety features powas the rx, the new. The lexus rx has met its match. If theyre talking about you. You must be doing something right. Experience the style, craftsmanship, and technology that have made the rx the leading luxury suv of all time. Lease the 2019 rx 350 for 399 a month for 36 months. Experience amazing at your lexus dealer. Maria welcome back. China trade talks between the u. S. And china resume for the first time in nearly two months this past week. With his vast experience in china, i asked Stephen Schwartzman to weigh in on these talks ahead of the big meeting early october. These meetings are really important, that are starting. Theyre at the vice minister level. And the reason theyre important is theyre coming over to basically tell us what they have in mind. Its really important as the senior negotiators, you know, bob lighthizer, whos the trade representative and steve mnuchin, whos the treasury secretary, to have a grounding to know whats coming at them, to know what chinas prepared to do. So the job of the meetings on friday with the vice minister level people and u. S. People on the other side is to communicate what chinas willing to put on the table. You would think that would happen at the big meeting coming up, but that big meeting should be to resolve points. You have to know what youve already got in your own pocket, and i think thats what the vice ministers are coming over. So that sets the table. Maria what would be victory, in your opinion . Because i think they reneged the last time, back in april, because they didnt like the enforcement action and the enforcement mechanism in place whereas if we were to see Chinese Companies continue to steal intellectual property, there would be some kind of enforcement mechanism place. Was that it or what do you think a good deal would look like . Is it just china buying more stuff, or does it have to include some of those big ticket items like intellectual property theft . I think just buying stuff doesnt get you, you know, sort of what the objective of the exercise is. This started out, trade issues, because china for 40 years has been the most rapidly growing company in world history, and theyve done an amazing thing. Their income per capita was well below 1,000, and now its 10,000. And so theyve developed a system to do that, and that system has very, has been very successful. The problem for them now is that the developed world has had a bad time over the last 1015 years, and our bottom 40 of people and its not just in the united states, its in europe as well feels disenfranchised. Theyre struggling financially. They have not had a good situation. Theyre angry and they should be. And that anger is, its communicated politically. And so now there are different proposals within the united states, but nothings working. And so theres the anger going towards china. And china knows that. And so the question for them is can they keep their system exactly the way it is, which is a winner, and what our governments looking for is much more equivalency. So, for example, the tariff plus taxes before these current tariff wars, it cost a u. S. Company three times as much to bring goods into china as for a Chinese Company to bring it into the united states. So thats really sort of unfair. Theres no one who would think the it wasnt unfair. Their markets have been closed relative to what we with allow them to do maria right. Market access is key, right . So all our governments trying to do is say, hey, cant we get closer so the best product wins . The cheapest product wins . You could win a bunch, thats okay. Well have a chance to win a bunch. But now its so uneven, its not fair. And so the chinese recognize this, they know theyre going to have to change. The question is the rate of change and how much change at one time. So what we would like is for them to be completely compliant with sort of the developed worlds standards. What they are saying is well get there eventually, but we dont want to do it right away. [laughter] and there are many different pieces that go with that. Enforcement is an important thing, as you mentioned. Why . Because people agree to something, but if they never do them, what do you do . And so the reason why china pulled out of those talks is that was one of numerous issues that they didnt like. They didnt like it at the last minute, which was quite surprising to the americans. So the advantage of the vice minister is that theyre going to tell us what from the old agreement, you know, still holds maria i see. And its not going to be just well buy some more stuff. And if thats all it is, that doesnt, that doesnt really accomplish the rebalancing. Maria coming up next, schwartzman identifies where the big bubbles are in the market today. More of my oneonone next. Award winning interface. Award winning design. Award winning engine. The volvo xc90. Our most awarded luxury suv. Ever since you brought me home, that day. Ive been plotting to destroy you. Sizing you up. 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Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Maria with welcome back. Stephen schwartzman is our special guest this weekend. Hes out with a new book called what it takes. It details his career from i growing up in a philadelphia suburb to building blackstone into the Worlds Largest private equity firm. He also identifies where the bubbles are in the market today. Pete and i did a lot of business together, and what we were trying to do was, you know, start the best parts of Lehman Brothers in a way without people. And ive always liked doing big things with few people. And, you know, thats a very profitable kind of model. I had no idea that, you know, the firm would grow to this scale. I always wanted it to be really successful, but, you know, part of life is you go where the rivers taking you, you know . Its hard to swim upstream x this is a powerful river. And we had a excellent strategy to start an advisory this was 1985 strategy, we never changed it, ironically. Maria interesting. Start advisory, we did that until a few years ago. We pun that off, its now called pjt. Then the second piece was go into the buyout business which we started raising money for in 1986. And the third part of the strategy was to go into new business areas where they were very depressed in terms of values where we thought there was a huge upside, where even i couldnt mess it up as a manager if we could attract somebody to run that as a ten out of ten in terms of talent. And that business itself would generate intellectual capital that would make the rest of the things we do stronger. And weve executed that strategy. The other people in our industry for the most part were just doing leveraged buyouts, which is a great business. And a lot of them did it very well, and they didnt quite understand why we were like these restless people doing all these other things. And the reason we did them, the reason we had this strategy is that in finance there are no patents, there is no protection. Anything that we invent somebody else could do the next day. Maria wow. So its a business of invention and innovation. You always have to have new things youre doing. So when we set up, besides doing what we were doing, we always had, like, radar out there. Whats happening, what could with we go into, is and we went into real estate in 1991. Now were the biggest owners of real estate in the world. Maria by the way, you recently went into a c corp. , you changed the structure of the firm. Yes. Maria is the stock still underowned, or do you think its catching up . One of the reasons you did this was because you wanted to make sure individual investors, pensions can all buy blackstone stock. We had handicapped ourselves. I give myself a d. We had a great corporate structure, you know, which minimized tax by passing it through to investors. But we found out that only about onethird of investors could buy us compared to buying all these other things. So we whittled away twothirds of the demand for our shares. So when we converted to be a regular Corporation Even though we pay a little bit more tax, that, all of a sudden that twothirds is looking at us, and, you know, theyre not sellers of it because they dont own it. Theyre only buyers. And so the stocks got a really great lift. Maria do you see any negative signals right now in terms of where we are . Well, sometimes people ask me about bubbles because i once said bubbles are easy to see, and somebody else said they werent. And, you know, we can sort of see things better than most because we have so many different businesses and so many different areas. Right now one of the signs which was there to be seen probably six months to a year ago are some of the valuations on private Tech Companies. And, you know, whenever companies dont make money or have no prospect of making money, thats usually a sign that perhaps this is not so good. And people explain why the models have changed, and amazon basically proved that, right . Maria thats true. The most astonishing Company Maria and google. Well, amazon, for sure. Right. Right. Amazon, for sure, their model. So everybody looks at that and says i want to be one of those. If i can go in instead of books and then instead of retail, i can dominate that, you know . Ill be amazon jr. And so people willing to pay enormous amounts of money in terms of valuations. You look at some of these valuations just as, you know, like a nontech pensioner but i know something about person, but i know something about that, a little of this is you just keep passing the thing around, and everybody thinks its worth astonishing amounts more, and everybodys happy because what they put in before becomes worth more until theres nobody to validate it anymore. Maria so does the private market today worry you . I think the private market for a number of these Tech Companies is demonstrably high. So you hook at things like uber you look at things like uber, you know, you look at a company like we works, you know, which is i dont know the company the way some people do, but the absolute value that people were talking about given what the Company Actually does, you know, sort of really surprised me. Its just sort of like an uber valuation would surprise me. And, you know, im not entirely inexperienced on these things, right . [laughter] so the fact that sort of we works just sort of collapses when it meets a broader investment set than the people who are playing that other game maria yeah. Of bidding something up because theres something attractive about the company. Obviously, thats why it happens. Maria right. So thats an area where you can see clearly that valuations are in a position of excess. Maria my thanks to Stephen Schwartzman, founder e of the blackstone group. Dont go anywhere, more wall street right after this. We trust usaa more than any other company out there. They give us excellent customer service, every time. Our 18 year old was in an accident. Usaa took care of her car rental, and getting her car towed. All i had to take care of was making sure that my daughter was ok. If i met another veteran, and they were with another insurance company, i would tell them, you need to join usaa because they have better rates, and better service. Were the gomez family. Were the rivera family. Were the kirby family, and we are usaa members for life. Get your Auto Insurance quote today. Audreys on it. Eating right . On it staying active . On it. Audrey thinks shes doing all she can to manage her type 2 diabetes and Heart Disease but is her treatment doing enough to lower her heart risk . [sfx crash of Football Players colliding offcamera. ] maybe not. Jardiance is the number 1 prescribed pill in its class. Jardiance can reduce the risk of cardiovascular death for adults who also have known Heart Disease. That means jardiance can help save your life from a heart attack or stroke. Plus, jardiance lowers a1c and it could help you lose some weight. Jardiance can cause serious side effects including dehydration, genital yeast or urinary tract infections, and sudden kidney problems. Ketoacidosis is a serious side effect that may be fatal. A rare, but lifethreatening bacterial infection in the skin of the perineum could occur. 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Also this weekend, sunday morning futures on the fox news channel, Senate Judiciary chairman Lindsey Graham and california congressman, devin nunes, my special guests this weekend. Catch the show live at 10 a. M. Eastern on sunday. Also this sunday, a special program on fox news, please tune into my onehour special Artificial Intelligence the coming revolution. Catch the special at 8 p. M. Eastern sunday night. Heres a preview. Routine white collar jobs like customer service, telemarketing and Loan Officers and tellers and jobs like that will be the first to be challenged. Then repetitive blue collar jobs like dishwasher, Assembly Line workers and a little bit later drivers also will be challenged. Maria lee says in the next 15 years 40 of jobs will be displaced by machines. He believes any job which relies on data is vulnerable. Things like Mortgage Brokers value waiting your eligibility or radiologists reading a mammogram. Meanwhile, start smart every weekday on fox business from 69 a. M. Eastern, mornings with maria right here on fox business v. A great rest of the weekend, everybody. Thatll do it for us now. Ill see you again next time. Gerry hello and welcome to wall street journal at large. This week were going to be taking a deeper look at how technology is revolutionizing health care. In the last few years major advances have been made in diagnosing if treating disease. Vast amounts of money are being raised in Silicon Valley and elsewhere to finance Companies Developing innovative means to make radical improvements in our health. Later in the program ill be talking to head of one startup thats finding ways to bring the best treatment directly to us. But first, one of the most promising areas of medical ch