White house director of trade and Manufacturing Policy and assistant to the president , Peter Navarro. Congrats first of all. You heard the president say the fed really doesnt know what it is doing. What should the fed be doing . Lets talk about those numbers first. David all right. They are beautiful. 224,000 jobs. Guess what . Construction and manufacturing added up to almost 40,000 of those. And as the director of the office of trade manufacturing, i just love it when we get more manufacturing jobs. Were up to over a half a million new manufacturing jobs since President Donald Trump took office. And that compares with a loss of almost 200,000 manufacturing jobs in the obiden administration. The other thing i love david im laughing at your reference to the obiden administration. Go ahead. Back through the campaign, when hillary was talking about the deplorables, these were the people, these were the prime age workers that were sitting at home out of the workforce, no hope, in despair because of the failed of policies of obiden, and guess what . You know what . Weve got over a million of those folks back in to the workforce, just amazing. So i take a lot of heart from those numbers. Having said that, i do think it is really important for the fed to lower Interest Rates. Let me explain why. Theres three things that go on when the fed hiked those rates. First of all, higher costs on the debt service. By the way, the fed managed to raise those rates just before they were issuing new bonds, which was just a selfinflicted wound. The second thing that we got is we got of course houses, bigticket items, like cars, basically Interest Rates go up, that discourages that kind of consumption, so thats growth harming, but theres also this other thing, david, as you know, when we get these higher Interest Rates, our dollar goes up. The value of the dollar goes up. That hurts our exporters. Import more, exacerbates the trade deficit, shaves points off our growth. Basically what the fed did was take away from the American People about 1 2 to a full point of growth with its precipitous rate hike and its quantitative tightening. They should have lowered Interest Rates the last time they had a chance to. We hope they will do it this time. And with the biggest reason of course they can do it is because theres zero inflation to worry about. David thats the point. When you have zero. David when you have 335,000 more people coming back did i say zero . David the point is, is that we have all these workers coming back into the workforce. For me that was a very encouraging sign of jobs numbers today. And that puts more downward pressure on inflation. How much do you think the fed should be lowering Interest Rates . Well, i would go for half a point. Look, its time to do that. Theres nothing to worry about here in terms of inflation. You skate to where the puck is going to be. And weve got to anticipate that these this higher Interest Rates hurts us, because of its impact on the housing market, the auto sales market, and our exporters. As head of part of the trade mission here, we hate to see the fed undo all the good work that folks like Bob Lighthizer and the president are doing on trade. We negotiate these great trade deals. We get people coming and responding to that, with their tariffs, and then we get the fed basically pushing up the value of the dollar and suppressing our exports. So we cant fight the fed. Okay . We dont want to be igt fooing the fed we dont want to be fighting the fed. Help us out here. Do the right thing. David let me bring up trade. We have new demands by china that all tariffs have to be removed before you reach a trade deal. Your response . Okay, negotiations 101 with china. Im going to tell you this is probably the most important thing you can have as a take away today, we started negotiations immediately after the bilateral, you know, saga this last week. Ambassador robert lighthizer, the best u. S. Tr in the world ever is personally engaged with the top levels of the chinese. Heres my recommendation, do not believe anything you read in either the United States or the Chinese Press until after that negotiation is concluded because david even when they quote chinese officials, which they were doing today . Absolutely. My experience coming out of Buenos Aires Argentina in december 1 of 2018 when we restarted the negotiation is i watched five months of spin coming not just from the chinese side, but a lot of times from the american side where multinational people were putting spin into the media, getting all sorts of bad stories in the fake news, so my recommendation is dont as investors, heres what you got to know, were engaged in good faith, deep negotiations, with the chinese. You should just be patient, and in the meantime, if you are looking for the next leg up, on this market, were going to hit dow 30,000, if we get two things, fed rate cut and passage this summer of the United States mexico canada agreement, which will get us over a point of gdp growth, over a half a million jobs, 75,000 of those jobs in the auto sector, and really, a north america which will be a manufacturing powerhouse. David let me be clear on this. You are saying even without the china deal, just the u. S. Mexico canada deal and a rate cut would be enough to bring us up to dow 30,000 absolutely. As you know, david, or maybe you dont, i have some credibility on this, the day after donald trump was elected, i got on television, on another network, forgive me for that. David everybody makes mistakes. Dow 25,000 based on tax cuts, deregulation, cheap energy and a level trade playing field. President trump delivered on all four of those things. We got dow 25,000. The next leg up, weve got to get this usmca passed. It is a great it is the smartest, biggest, most intelligent deal ever done. Lets get that dont. Lets stay focused on that lets get that done. Lets stay focused on that. David before we leave china entirely. You put the nix on that idea they are saying you have to take off all the tariffs before we negotiate. Is there any precondition from their side for a trade deal . No, not that im aware of. We had very frank discussions. You can see the warm personal chemistry between president xi and our president. We had frank discussions, and coming out of that meeting, the negotiations started immediately. The chief negotiator on the chinese side was sitting next to president xi. Robert lighthizer was with our president , just a couple of chairs away. David right. As soon as that was over, they engaged. They are engaged. We will move forward, but it is going to be behind closed doors. David no doubt, particularly because their economy is going down, and they have problems in hong kong. I have to ask you one question. I promised some soybean farmers or people who worked with them, i would ask you, if i had a chance, farmers in the United States, they have 21 billion dollars in exports around the world, the soybean farmers a lot of that goes to china, they are worried about losing their market share to the brazilians because of the tariffs the chinese are putting on our soybeans, what do you tell these farmers who want that market share back that they have lost . Well, the president has their back. As you know, sonny perdue is providing some assistance at osaka. President trump stood up for the farmers. In fact, president xi made a comment about how President Trump was the guardian of the american farmer. The chinese side promised to make immediate and significant purchase of agricultural products. Lets see if they keep that promise. But in the meantime, you know, soybeans are important, and lets see what happens, but donald trump has the backs of american farmers. David brazil now has 52 of the chinese market. We have 31 . You think we could reverse those numbers if we get a deal . Of course. Lets see what happens. I think that whats important now is let these discussions happen behind closed doors. Once they are done, they will be full, full transparency, but in the meantime, lets stay focused on the prize here. Remember, david, what were fighting for here. You would agree with me. I think every single panelist would agree with this statement, we have to stop china from doing the following, cyber intrusions into our business network, forced technology transfer, intellectual property theft, dumping unfairly subsidized products into our markets, Stateowned Enterprises conducting unfair trade, currency manipulation, and dumping opioids particularly fentanyl into the United States. I hope everybody on your panel will embrace the idea that we must stop the chinese from that david i think we all do, but the question is whether you can verify if they will do those things. The verification part is tricky. Part of my task and mission in this whole effort is ensure we have both monitoring and enforcement of whatever deal that is made. And we have strong Enforcement Mechanisms on the table, but its just as important to be able to monitor whether the chinese are in fact stealing our intellectual property or forcing technology transfer. So we are on the case. President donald trump is on the case. This is highstakes poker, but its gratifying to know that capitol hill, both sides of the aisle, are totally behind us. A recent poll came out, a harris poll that showed that 8 out of 10 republicans support the china tariffs and 53 of americans support the tariffs because those tariffs right now are on an insurance policy to keep the negotiations going in good faith and they are an offensive measure against the economic aggression china has been engaged for 15 years since they joined the world trade organization, and both george w. Bush and barack obama and joe biden let all that happen. Donald trump is standing up for america. David let me just ask, i believe what caused the chinese to pull away from talks the last time was this question of verification. Is there a way that we can specifically nail them down on verifying that they are not doing the harm that they have been doing in terms of our intellectual property . It is not clear to me why they backed away. The history of this is clear. We had more than 150 page detailed document that had been negotiated word by word by word. Seven chapters that correspond roughly to those structural issues i referenced earlier, such as, the intellectual property theft and forced technology transfer. At one point, they came back to us with a microsoft word document that was heavily red lined and effectively wiped that entire agreement out, not clear why. But whats good knew is were back on but whats good now is were back on track and using that as a starting point for moving forward. Again, david, whats important here for investors is in the short run, lets see what the fed does. Lets see what we get with u. S. Mexico canada agreement. Thats the next market movers. Trust robert lighthizer, as our chief negotiator, working closely with President Trump on this. Lets see what happens. In the meantime, things are were in a good place now in a lot of ways. And todays job numbers i think speak to that. This is an amazing economy. And i mean, incredible stock market. So lets keep riding this goldilocks market. David it was a great gift on a wonderful week in celebration of july 4th. Happy Independence Day to you, peter. Thank you very much. Take care, david. David really appreciate it. After a quick break, did our panel just hear something that Peter Navarro said that gives them hope for the markets on monday . Details of that, coming up. Most people think a button is just a button. That a speaker is just a speaker. Or that the journey cant be the destination. Most people havent driven a lincoln. Discover the lincoln approach to craftsmanship at the lincoln summer invitation. Right now, get 0 apr on all 2019 lincoln vehicles plus no payments for up to 90 days. Only at your lincoln dealer. All right brad, once again foi have revolutionized the songwriting process. Oh, here we go. I know i cant play an instrument, but this. This is my forte. Obviously, for auto insurance, weve got the wheel route. Obviously. Retirement, were going with a longterm play. Makes sense. Pet insurance, wait, let me guess. Flea flicker. Yes howd you know . Studying my playbook . Yeah, actually. Do not believe anything you read in either the United States or the Chinese Press until after that negotiation is concluded because my david even when they quote chinese officials which they were doing today . Absolutely. Absolutely. As investors, heres what you got to know, were engaged in good faith, deep negotiations with the chinese. You should just be patient. David thats Peter Navarro moments ago. Did he just tell us something, anything that would give investors hope on monday . Carol . No. [laughter] i think that he gave us a lot of optimism that obviously theyre still very engaged in a deal, but that key word patience i think we need to take to heart. This is a deal thats taken a long time. It is going to take a long time. I think it is worthwhile, but the closer we get to the 2020 election given the fact that china has art has sort of an infinite time frame and we have the 2020 president ial elections. On the one hand, he criticized china for manipulating its currency and then he says we should lower Interest Rates to drive our dollar lower to help exporters. He wants to manipulate our currency here. Peter navarro and the president want to decide what the right interest will be, who we export to, what kind of tariffs we should pay. Although he kept saying people should be patient with these tariffs. Farmers should be patient. Look they are having an impact, 22 plus billion dollars, americans, they have paid, as you mentioned the farmers have been completely decimated. Im sorry, prices have gone up. People who bought a grill this 4th of july paid about 10 more because of those steel tariffs. It is every day americans, not china as navarro often says that are paying the cost of these tariffs. I completely agree. You know what . We have seen record job numbers. Weve seen a rise in wages. Everything is going well. The tax cuts, the deregulation. President trump didnt need lower Interest Rates to get the market to record territory. He doesnt need it to get to 30,000. The last thing the president needs is someone to say, you know, a few years from now, that the president needed help from the fed to boost and sustain the economy. Thats not going to work well for President Trump. David but jonas, we saw what happened when the fed was raising rates a little too much in december. I mean, we came very close to a downward spin in the economy. Yeah, all that crisis in the markets late last year was because rates were going up. I mean, they were initially going up for pretty good reasons. The economy was very strong, and i want to say as much as ive been bashing the fed too because im a low Interest Rate person, i think rates should be low, lower than they are now, they didnt raise them to 5 either like in the last recessions and caused a serious recession. We did avoid that problem. So it is not a disaster. I think the most interesting part of the conversation about navarro about our government is so in debt that we need rates to be lower. We should err on the side of low rates because we cant afford to finance our debt at 5 . That in itself would lead to a snowball effect. Were not going to do what germany does which is keep a balance budget, raise taxes, cut spending, thats not going to happen here. Theres no political will for it. We need inflation and a strong economy, and the best way to get that could very much be like [speaking over each other] these are questionable things we are getting into right now, but the reality of it is were not going the noncentrally planned way get out of our deficit, debt situation, the economy is strong. Were still going to have this war. Im just saying jonas, you know theres no such thing as a free lunch. Look at japan, 20 plus years of ultra low Interest Rates and a more abundant economy. Look, we dont learn from history, even with Peter Navarro with all respect that bushs 02 steel and aluminium tariffs cost jobs, cost gdp, they cost the economy. Once again, were making the same lessons on Government Intervention david carol, i need to step in and throw it to you. Do you think this president is more of a central planner than the last president was . This is the president who was pulled the government out of so many areas in which this economy was overregulated. Doing the opposite of Central Planning with regard to deregulation, no . Hes bifurcated. I certainly agree with you on that particular standpoint, but if you think about the fact that hes trying to dictate what the fed should do and what hes doing with tariffs, not to say that i do think we need to do something with china, and obviously the spending issue too. I mean i would have loved to see trump cut spending and balance a budget. Those are the kinds of things i think people are wanting to see him do. I dont think hes the same level of central planner that obama is, but hes not doing enough things that i think people would like to see him do. David we have to wrap it at that. There was a lot in that interview. Thank you, gang. 2020 candidate joe biden making his case for illegals getting free end quote healthcare. Does he have a point . We will ask republican congressman andy biggs, coming next. 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