The United States. And Federal Reserve chairman Jerome Powell also drawing the ire of the president today, failing to respond to chinas retaliatory tariffs, leaving the president to wonder if powell or chinese president xi jinping were the big earnmy bigger enemy. For the latest, we turn to edward lawrence. Federal reserve chairman powell says the fed will act as appropriate to sustain economic expansion. Having said that, trade uncertainty has come to the forefront here at jackson hole. A good part of the speech today focused how theres no precedent to integrate trade uncertainty into monetary policy. The speech laid the groundwork for a rate cut in september, pointing to global shocks, like whats happening in hong kong, germany, china, the economy slowing down and brexit. The speech did not indicate a long series of rate cuts and that set off the president on twitter. It started with the president saying we have a strong dollar and a weak fed. He ended up asking who is the bigger enemy . J powell or chairman xi . Now the president doubling down on china via twitter saying he will raise 25 tariffs to 30 on 250 billion dollars worth of imports of china on october 1st. Then the tariffs starting september 1st would go to 15 from 10 . Every fed president i talked with said the tweets dont make a difference in their decisions. They enjoy a level of independence from the president. Now, i was told on many occasions, the Federal Reserve is looking longterm and will not react to daily pressures. But the feeling at this years symposium has been a little bit more serious. The Federal Reserve is now front and center in the middle of the trade debate and the president put them there. David . David edward lawrence, thank you very much. Joining me now, Peter Navarro assistant to the president director of trade and industrial policy, the director of the White House National trade council. Great to see you. Thank you very much for being here. Good evening, david. David it is no news to us. For years the president has been saying what hes going to do, how hes going to get china to behave. Today a lot of people thought was a wakeup call, but we have known for literally years that this is more than a trade deal. This is about changing the way the chinese do business with america; right . Yeah, i want to have the president s words come to people. I want to read this tweet. 15 seconds. For many years, china and many other countries has been taking advantage of the United States on trade, intellectual property, theft and much more. Our country has been losing hundreds of billions of dollars a year to china, with no end in sight. Sadly, past administrations have allowed china to get so far ahead that fair and balanced trade has become a great burden to american taxpayers. As president , i can no longer allow this to happen, and heres the thing, david. This was not a political decision today. This is something transcendent, it is about god, country and the american working class in this country, been attacked by chinese aggressive policies in the last 20 years. The president sent a very clear signal to china today. He also sent a very clear signal to Corporate America which has been offshoring our jobs to places like china that whats important now here is having a strong america, having a fair and balanced playing field, and this is what this decision was about today. David what surprised me i mean, i expected a downward move by the markets. I did not expect a 600 plus point loss today because of the president doing what he said he was going to do time and time again. Were you surprised at the downward move of the markets . Not at all. Let me give you some comfort on that. There was two things going on. First of all, as you know, when the market starts moving down now these days, youve got day traders and you have got program traders that take up little volatility. They play on fears in the marketplace. And some people went home happy today, short sellers and day traders. And unfortunately, some people got shook out of the market. This was not a marketmoving event of that magnitude. As you know, weve had tariffs on for over a year. The stock market has gone up fairly steadily, and weve had close to 3 growth, and this economy is solid. So i think the bigger thing that was in play here, and this is why the president tweeted about j powell, the fed once again let us down today in jackson hole. They simply dont understand that the trump economy, with its deregulation and its tax cuts, its cheap energy here, can grow easily, easily at 3 without triggering inflation. This whole nonsense about how trade tensions are Holding Things back. Its not that at all. You look in the data, and its very clear, higher Interest Rates by j powell mean a currency, a dollar thats gone up by over 10 , and you see right in the q2 data, we lost 2 3 of a point of growth simply because of reduced exports. So the fed is killing us, just killing us with their misplaced policy, but heres some good news, some bullish news, the European Central bank has announced that they are going to engage in a fairly strong cycle of monetary easing. Why does that matter . A strong europe will mean Strong Demand for our exports. Heres something even better. This is more subtle david. When the ecb does that kind of cut, and the chess match of central bank, it is going to put further pressure on the fed to lower rates because you cant have these big spreads between our rates and the euro bond david by the way, peter china is also going to put more pressure on the fed, and in fact, thats one thing that mr. Powell said today, in his notes. Indeed. David if there are more trade tensions, and clearly there are, that will put more pressure on the fed to lower rates. The president tweeted out something about the president of china, comparing him to j powell. He said that essentially he asked the question, who is our bigger enemy . Chairman powell or chairman xi . And what do you think . I mean, what would be your answer to that . Well, i would say that weve got an apples and oranges thing here, but what i can say is this david let me ask, though, do you really think that chairman powell is an enemy . Hes certainly destroying what is a healthy growth rate in this country, with his Interest Rate policies and the seeming pride that will not allow him to acknowledge what was a severe mistake and instead what he does is he blames things on trade tensions when in fact Everybody Knows that if rates go up, and our currency goes up, our exports got to go down and our growth has to go down. So heres the thing david quickly, because i do want to get one question, but go ahead. Sure. Well im just saying that in terms of what the fed will do, i think youre right, that what china did today and what the ecb is doing is going to put more pressure on the fed to do the right thing. They need to do the right thing. If they do the right thing and congress does the right thing, passing u. S. Mexico canada agreement, if germany engages in a fiscal stimulus and we get brexit straight and get a great deal with the u. K. With the u. K. The president is going to that g7 meeting and be able to make his case in person to a lot of these european leaders. Let me ask, though, because one of things that did shock businesses, gave them pause, anybody who does business in china, were the words of the president , American Companies and im quoting here are hereby ordered to immediately start looking for an alternative to china including bringing your Companies Home and making your products in the usa. How would those orders be carried out . Let those executives take that statement for what it is and interpret it as they will. What i can tell you is this, what were seeing over the course of the last year and a half is that the supply chain is moving swiftly out of china, thats one of the ways that they are enduring the pain from the tariffs. The other way is devaluing their currency and cutting their prices. David right. This is going to be good david peter, i have to press you on this specific meaning of the word order which is a clear word. I mean, theres no ambiguity about that word, and there is a law on the books, the emergency exhibit powers act of Energy Economic powers act of 1977, i will quote from it, it authorizes the president to quote declare an unusual and extraordinary threat to National Security or the economy. It further authorizes the president , after that declaration to Block Transactions and freeze assets to deal with the threat. Many people are saying he does have the authority, the Legal Authority to do that. Would he exercise that authority . I will simply repeat what i said. Let these Business Executives interpret what the words means to them, with the idea that clearly if you see the chess board correctly, theres increased geopolitical risk of locating your production in china. I think what were seeing is a very healthy relocation. Some of its coming home, which is great for pe great for america. Some of its going to vietnam, which is also great for america and those folks are likely to buy our stuff. David peter im bullish based on all these other things but the president transcended decision above politics courage and thats what donald j. Trump is about. David we have to leave it at that. Quick last question another one. David are you going to europe . No, that plane leaves momentarily and generally i dont go to the g7, unless china is involved. I went to buenos aires, osaka and beijing. Im let kudlow carry the flag with lighthizer and they will do a great job. The president is going to bring home some news. I promise you on that. It will be good news. David lets hope it is. Peter, thank you very much for being here. Appreciate it. All right, david. David todays trade tensions sending the markets lower. The dow closing down 623 points. The s p falling 76. Nasdaq dropping 240. Stocks today losing 825 billion dollars in market cap, according to the wilshire 5,000. 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David President Trump right now preparing to head off to france and the g7 summit tonight, amid an escalating trade dispute with china. Earlier today, the president claimed the Left Wing National Media and the dems are desperately cheering for a recession in an effort to hurt his reelection chances. He vowed he would win again in 2020 and called the economy strong and good. Joining me now, former Trump Campaign senior trade and jobs advisor curtis ellis is with us, and Francis Newton stacy director of portfolio strategy at optimal capital solutions. Good to see you both. Thanks for being here. Francis todays market spasm. Lets start there. Does it continue on monday . Thats a great question. It depends largely on news. I noticed he waited till after the market closed to announce his additional retaliatory tariffs, but the problem is is that the market is desperately trying to price this in. The good news today is that the vix did not make a new high, thats the volatility index and the market did not take out the recent lows from the last two weeks. So thats good news. If the market holds there, if they think they have this recent development priced in. If not, this is a heavily news driven event, so it is going to increase the volatility, and as a market person, i feel like the child in a divorce. The innocent child in a divorce. Yeah. David let me ask because today of course the market moved on china news. But the president is going to europe, and we have issues with europe as well. They want to put new taxes on, new regulations. Theres apparently this manifesto thats circulating among european members that will be meeting with the president about some kind of tariffs they may be putting on what happens if we get bad news like that over the weekend to markets here on monday . Tariffs from europe is going to be new additional bad news. And i do see the Market Selling off quite substantially, but if its whether or not we take out the may low first of all and below the may low, we have the december low. Traders and market people and investors will be watching this. I can tell you, investors are getting ever more defensive. We know they are screaming into the bond market because those yields keep dropping and that curve was inverted, you know, more today than it ever has been before. David take money out of stocks they put it into bonds. Thats why thats going that way. Curtis, President Trump in talking about the chinese the new chinese tariffs mentioned that they were politically motivated. Explain. Well, weve seen that the chinese had been putting tariffs on American Farm goods, and in addition to putting the tariffs on the farm goods, they then take out advertising supplements in the des moines register, explaining how this trade war is hurting farmers. They are using tariffs as economic sanctions to influence our election. David they are trying to prevent reelection of donald trump. Exactly. While the democrats are all upset about russia interfering in our election, they are absolutely silent about chinas blatant interference in our electoral process. They are targeting political constituencies and using tariffs to do it. And, you know, it is interesting that while mnuchin and Bob Lighthizer were in china, a couple of weeks ago, trying to negotiate an end to chinas economic aggression, you saw Kamala Harris and the democrats on stage saying we will get rid of these tariffs. We will get rid of the trump tariffs against china david the democrats are upset because then you have schumer saying the president is doing the right thing with the tariffs. Thats right. David they have got to straighten that out. I want to know about our relationship particularly Donald Trumps relationship with president xi, which had been kind of cordial in the past. Is that cordiality going to be gone now . Well, it sure looks like president xis got a little more problem than he ever had before. The president has been as a good negotiator, said this is not a personal thing. This is business. I have a great personal relationship with you, but i want to buy your Company David hes calling the president the enemy. It is a different way of approaching the negotiations. This is a wakeup call as Peter Navarro was saying, this is not simply about trade. This is a National Security issue now. David can markets go up if the trade tensions continue through the election . Well, at certain point, markets will try to price this in, and they are also going to try to price in the 75 basis point cuts that we expect from the fed. Thats what the fed futures are telling us for the january contract. David 75 thats pretty close to what the