suzanne. dagen. >> every day. [laughter] er day have a great day everybody we're watching this market open down 300 points. varnny and company pick it up. good morning everyone. >> threatens new tariff on china and market selling off those are the big stories of the morning thus far. first let's deal with trade. president trump threatens to impose a 150% tariff on 200 billion worth of chinese goods entering america. repeat, it is a threat that tariffs have not been imposed. beijing octobers to what it calls blag mailing beijing threatens to respond in kind but again it is a threat of action in the future. the status right now -- standoff with escalation threatened on both sides. on our program today the question -- are we now in a trade war? or is this just one more stage in the, obviously, tough negotiations? the answer is important because the u.s. and china are are the the world's greatest traders.

now, look another financial fallout yes a stock market selloff the dow is down about 300 s&p 500 down about 28 and a near 100 point loss for nasdaq. it is worth pointing out, however, that china's market has been hurt much more than wall street. here is the question we pose for investors today. is this a temporary dip as we seen in the past ? or is it the start of something much bigger and longer lasting any bets how we close out today plenty of time to decide we have a three-our hour show. "varney & company" is about to begin. one more imtile show you how far down we're going aside ohming bell significant losses all across the board. the dow, the sm, and the nasdaq composite now look at individual stocks. it is big industrials like boeing and caterpillar united

technology they have the the most pex pow sure to trade disputes they are significant exporters. and they no surprise -- are the biggest drags on the dow right now. all of them down about 1, 2%. enjoing us now market watcher mike murphy, the obvious question mike, and i know you're ready for it, is it a dip or start of something longer lasting? >> this is just a dip for investors watching at home this is not the going of end of the market this is a temporary selloff we've seen several of them over the course of the last six to eight months this is a buying opportunity for you see quality names drop down to a bipoint you want to use this as an opportunity to buy them. >> you're a brave soul -- you really are. you're telling our view rs that you see some bargains out there ignore overall market don't qoish the trade. get by right in there. three or four% off all time high china is at a lowest level and lowest level in two years. down 10% pullback this china so

this is gork that will end focus will come back to the united states to earnings and solid strong growth is going to push stock pricings high or. >> stay there murphy you have to stay through opening of the market because you've said outrageous things right there. we're follow-up. now former reagan chief economic advisor and harvard professor martin is also with us thissing sitting on my right-hand side welcome to you. is this new a full flown trade war or is it just one more in the round of negotiations? >> well, we haven't decided what wept to negotiate about and we haven't told the chinese so -- but haven't we told them we want to get that massive trade in balance down? >> but that's not the big issue. the big issue -- is what's happening to the

chinese stealing of u.s. technology? that's what we should be negotiating -- about -- >> that's not on the front burner row but that is tariffs. but our tariffs are -- how is it going to end? only if they cut our bilat central trade imbalance that's not a big deal it really doesn't change much for the u.s. economy. but if we can get them to stop stealing technology you know how they do it they say you want to do business here in china we have 1.4 billion people, it's a good market. but you have to find a chinese partner. and when you find that partner you have to give them your technology. now said that we have filed a complaint with the wt0 and said that's unfair practice against wt0 rules that's what we should be negotiating about. but -- >> i'm sorry i don't marine to intrucht but real short on time and i know how it is it is combat tv you know how we do it here if you were the advisor the

senior economic advisor the role you played with president reagan what would be your advice to trump? >> i would say we want to negotiate with the chinese to get them to stop stealing u.s. technology. and if they -- if we have a successful negotiation, we don't make these tariffs take place. >> so you change the focus of the negotiation change it towards the stealing of intellectual property the stealing of technology and away from the near imposition of tariffs? >> that's right tariffs are only a way of getting them to the table. >> look, the way we're going now -- there is damage to both sides. but neither side wants that. >> not a lot of damage. you know, 200 billion dollars is one percent of the chinese economy. and a 10% tax on that is 1 tenth of one percent not a big deal. >> we don't think we're affected that much at all. >> i don't think so, no. >> but neither side can afford

to back down and lose face that's a very important concept in china. >> all they have to do is sit downed a table and talk about the real issue which is not the bilateral trade imbalance but the stealing of technology. >> if you were an investor, would you be a buyer of this dip? >> i'm the not smart enough to -- [laughter] stuart: harvard professor. [laughter] >> i think it depends how long-term your views are. i think the market is overpriced quite apart from the trade issues. because i think we've had a decade of superlow interest rates which have pushed stock prices way out of line with past price earnings ratios so i would be nervous about buying even if we weren't dealing with the chinese. >> i think our audience is listening to you indeed. harvard, and mr. reagan top economic guy, thank you very

much for joining us. very important day. we appreciate it. thank you, sir. all right let's get to immigration. homeland security secretary kirsten neil son faced press called on congress to act. one report per played the sound of my graduate children migrant children crying but it was played anyway in the middle of a press conference. and a photo of a young child's hands clutching the side of a cage -- that's playing bit on social media, the picture, though, was staged. the child is not a detainee. joining us now washington times associate editor larry o'connor. i see plenty of emotion from the yeedz and from democrats but i do not see any of them offering solution. what say you? >> they're also short on fact. you know stuart the moment you think that the -- political reporters here in washington have reached the lowest depths of cynical defeat in their campaign against this president. they find a slimier place in the gutter to dwell and we saw that yesterday in this -- press briefing.

that audio that they played first of all it is completely unverified those children who were crying except for one child dinner propublic on about takenned this audio they published it and if you dive deep into their article tons down to the bottom they talk about this one girl that is on this tape. well yeah she was separated by her parents. her parents actually separated her from themselves. they gave this girl to a smuggler, a human smuggler and sent her on this 2,000 mile treacherous deadly journey to america that's not the government or the trump administration. we need some facts in this. this is an important issue. there are children at stake. but all of the mess and the the noise that we're getting from journalists that's not helping anything. >> what are we going to do when the surge and there's a surge already in progress. when it -- heightens up and we've got a mass movement of people on the border clambering to get in. >> democrats will say let them in on humanitarian grounds. what are we going to do? >> i think american people put

this man in the white house to promise to enforce border and i know that gets messy sometimes but in the same way about when the obama administration allowed people to cross this border, that basically said yeah we're not going to prosecute laws as written. that sent a message and millions i should excuse me. thousands and thousands and a tens of thousands of migrants cross that border illegally and now living in this country. the new president who was elected on the promise to enforce border needs to keep that promise. it is going to get messy by the way one other thing. isn't it remark thbl sort of thing seems to happen every time there's an election year. 2014, 2016, and now 2018. i'm sorry -- but i smell a rat. >> 20 seconds left would you agree with me that at this moment the democrats are winning on this it shall of family separation? >> ting they're anding in the media in new york and d.c. and i think in the hearts and miepgdz of most americans i think that the facts are still on the president's side and need to stick to his guns sir.

>> thank you much for joining us, sir, back to the market any change, no we're still down about 340 points. that's the prediction for the opening bell 20 minutes from now. look at this, the yield on the tenure treasury all wait down to 2.88%. that imply it is that a trade dispute will have a negative impact on our economy. bring interest rates down, that's i think that's the implication from a 288 yield. price of oil down to 68 a barrel off a dollar in early going today. google making a move into health care -- for that new soft square that uses artificial intelligence to predict if a patient will die in the next 24 hours. the stock so down -- check this out. some stuff from ibm that hosted first ever debate between a human and a machine. the topic should space exploration be despised by the government ibm's guy municipal this hour to tell us who won that debate. president trump doubling down on

his cause for new branch in the military, the space force -- physicist says, china and russia are already ahead of us when it comes to space based weapons. we need to catch up he joins us in our next hour. a bombshell from yesterday's inspector general hearing former fbi chief james comey under classified information what will napolitano say about about that. find out in two minutes. was a . was a . it was worse. a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day.

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i have the chills. because you're so excited? because ice is cold. and because of all those miles. obviously. what's in your wallet? i'm not sure. what's in your wallet? let's keep you date on the state of the market 15 minutes into advance of the opening bell and still down about 340 points. big drop for the dow coming up. it is industrial stocks sensitive to trade they're the biggest losers look at them go down. u.s. steel another steel company boeing deere, new core all of they will on the downside right now. they're the biggest losers premarket right now. now this came to light during hear technician yesterday the inspector general is

investigating james comey for mishandling classified information all rise napolitano is here. do you see any significance that he is being investigated? >> all right the investigation is over to whom did he give the memos that he wrote to himself about his meetings with president trump. a, was it classified? b, did he give it to a person who was authorized to receive classified materials? he says yes he gave it to another fbi employee, the former professor at columbia this is not investigation about whether jim comey broke the law that's not what inspector general looks for but investigation about whether or not he violated doj internal procedures does the public care about that? i agree request with you. >> there's no significance to this. supposed to be a -- is not. i think this is a footnote. okay he says fbi agent it is they're bias against trump did not influence the election. and if i guess he's saying

didn't influence investigation of hillary or the fbi as well. >> but he's not saying there was no bias. he's say there's plenty of bias, bias is human. fbi agents are pex pressly allowed to have political opinion the. but if those political opinions affect law enforcement judgments -- , obviously, that's wrong. he's saying, yes there was bias. strong opinions but it didn't affect law enforcement decisions. >> is the evidence there that we have not yet seen that suggest bias affected that decision. >> some material which mr. war wits has but was not revealed to the investigating committee yesterday and when we're going to get it. e-mails and texts from about nine unidentified fbi agents. look, the ultimate decision not to prosecute her was made by one person. james comey. he made that decision because he

he believed his boss the attorney general had -- had taken herself out of the chain of command by that meeting on the tarmac with bill clinton. did jim comey do right thing under the law absolutely not so if his judgment was so defective as was articulated yesterday why doesn't the current doj correct that judgment? why don't they take the evidence that mrs. clinton gilt overwhelming present to grand jury -- >> answer your own question. because the present justice department is -- >> that's difficult for me because he's a friend of mine but i have to honest with you. the -- fire him -- >> president is rant aring and raving about jeff sessions but he's not fired him. i understand -- jeff sessions has twice resigned. the president took the letter of resignation and president dramatic hand writing wrote,

rejected and had it -- hand delivered back to the attorney general -- twice! >> that's understands why this is happening. i mean, i think that the president thinks he can influence the direction of the doj by his tweets rather than are his phone calls to his aj it's a different way of communicating. jack and bobby kennedy talked half dozen times day. trump and sessions sessions sit around waiting for twreets what's coming next? [laughter] never thought we would see this -- >> a pleasant week for him. never thought you would see this. ever judge see you again in the 11:00 hour. thank you, sir. check the futures any change -- no change -- still down over 300 point when this market hits up and running. microsoft get ling backlash for its contract with i.c.e., immigration people. now only tech company which is being slammed for helping law enforcement. can you believe that? we'll explain it in full after this. liberty mutual accident forgiveness

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so, i have this recurring dream. ♪ i'm 85 years old in a job where i have to wear a giant hot dog suit. what? where's that coming from? i don't know. i started my 401k early, i diversified... i'm not a big spender. sounds like you're doing a lot. but i still feel like i'm not gonna have enough for retirement. like there's something else i should be doing. with the right conversation, you might find you're doing okay. so, no hot dog suit? not unless you want to. no. schedule a complimentary goal planning session today with td ameritrade®. >> 8mens from now on and this market opens the the story on big tech and plittization therefore, microsoft being slammed on social media because of its contract with i.c.e. immigration people -- it's top guy says he's dismayed by families separations at the

border. then we have amazon shareholders, asking jeff bezos cofounder to stopping facial recognition technology to source. what do you make of this the -- >> it is going to continue everybody with social media now everybody has a voice. or or they have a platform to tell their ceos their board members, their shareholders how they feel so this isn't going to change i think in this case similar to if you remember the muslim ban that a lot of big tech companies were getting a lot of slack over at the time as well. it blew over. i think this is a case where -- president trump and the administration have to address this because -- the regardless of whether it is true or not -- the optic of this are really bad for -- for the administration, and if you're the ceo of microsoft, it is also looks bad for you when you come out and said that you have a contract with i.c.e.

so -- refusing to work on a pentagon contract to defending the nation. that's going a little far isn't it? >> i couldn't agree more. you have a -- a lot of companies in sol con valley are politics are to one side which is to the left. but i think that's where the job of these ceos have to come in and they have to be able to state how the company feels about that. >> what do you got ash? >> microsoft is about i.c.e. issue with separating of family because back in january it was touting i.c.e. as being we're proud to support you because you're working with us and we are are now cloud program. but -- the issue of separating kids from families who are trying to come into the country illegally -- i i don't know. >> i just got a problem with politics intruding on the work of these huge technology enxas. you can keep families together in administrative instead of

separate them by criminally prosecuting them and criminal federal detention centers they're saying common sense fixes that's what they're showing a lively debate. >> all right. [laughter] stuart: the market -- i just don't like this intrusion of politics. if you -- these companies should make a profit and lead america forward in technology. and the idea to be held back because of a leftiest plucks among their work force forget it. i don't like it. >> go to citizens united free speech for companies. >> not denying free speech but saying i don't like it. the market will open down. at a about 4 and a half minutes to take you there -- after this. [laughter] how do you win at business?

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>> now, we are expecting a big down day in a couple of seconds literally half minutes time, however, we do have to report that the underlying economy america's economy remains very, very strong. so i'm going to ask you before market opens ash, liz, are we not strong enough to accommodate a minor leagues increase in tariffs from chinese goods? >> of course we are. but when you take a step become or five steps back you say no we can handle this. trouble is those headlines do

have an impact on investor. 50 billion now -- saying might be the start of something bigger. down the road -- one more. >> but for china we have four time mrs. things to pass and china does -- regulatory option. now 9:30 eastern time up, running and we're down 250 points in the early going down 278,281 and down 294 and dow is now negative for this calendar year. 2018 and we're off 321 points almost all of the dow 30 are under downside and only verizon eking out a very is small gain. that's a loss of one and one-third%. the s&p 500 is down about about 1% a narrower loss there. as for nasdaq that is on downside to tune of 1.1%. so we have and across the board decline for almost all stock on market this morning. the tenure treasury yield and

money going into it because yield is coming down. priceses go up yield goes down. this could be a flight to safety. okay that's what it is. i thought it might be a sign of coming weakness in the economy. but fact that it is a flight to safety. 288 is the yield. some of the biggest losers are the industrial stocks with exposure to trade look at the this. boeing and caterpillar and united technologies all of them way, way down. okay, here is the russell 2,000 is this the exception? that is the indicator of small companies stocks and only down .6% after hitting a series of record highs recently. so that's where the selloff is not concentrated. to my right mike murphy to the left setting like this, number one is today just a blip or is the start of the selloff is it start of something bigger number two, are we in for a trade war

or is this just one more to series of tough negotiations? okay i'm going to ask that question and start ising with you ben phillips number one is this just a dip or the start of something big? >> you know what we're looking at a little bit of an indication so we're saying you know is this the world being concerned in u.s. stock market being concerned about what's going to happen with global growth. if we see trade be disrupted on global basis that is a major risk so we're watching this and we're getting ready to load the shorts question haven't put shorts on yet but we're watching. >> at this moment you're prepared to say maybe it is a dip we're not that worried about -- a big problem -- >> technical indicator hasn't crossed in negative territory yet but we're watching. i've asked you is it a start of something big? answer again -- flip-flop, i would never. this is a blip. this is, you know, stuart question talk about oil move up to 70 that was an issue. we talked about the tenure crossing 3% that was going to be an issue. this is a short term headline grabbing issue.

the focus will come back to the u.s. you talked about russell 2,000 reason that has had strength is smaller companies are more u.s. focus sod you are still getting growth in the u.s. until that changes now this explodes, then you have to watch and take some risk off but right now this is a short-term blip a buying opportunity. >> real fast ben is it a trade war or just one more negotiations? >> i think it is still negotiations, i don't think we've -- the the war. traitd war or just one more series of negotiations -- one more series of negotiations. >> okay. ben what are you buying for them? >> so we're buying nontraditional legenders so we think regional bank play is done actually and rotate into nontraditional lenders and other ones that are similar to that. we're selling the bank and selling just on the fact that nafta won't be kind of resolved it until 2019. >> what are you buying?

>> there's an opportunity to jpmorgan bank of america and citi group is biggest buyback i would not sell on this news. >> you would not sell on this news. okay let's wrap it up for the moment now four minutes into trading session tuesday morning down 312 to be precise that is one and a quarter percent. more a little bit more on trade, the senate rebuked president voted to reinstate a ban on selling parts to chinese tell company zte does that kill them? >> wrapped up in a bill and senate and put it part of the defense bill. don't forgetting the president trump negotiated with chinese president gee saying don't worry. we'll lift this ban on selling the u.s. products to zte now it goes back to the house. what had the president will try to do is persuade congressional members to take that bag out but it's not good. it's rebuke of the president

there's no doubt. >> interference. they're saying they're spying by zte on government and military workers. they're interfering with the trading position. i mean he can't negotiate if he has the senate trying his hands on zte that's just my opinion. "new york timeses" says trump told tim cook that the iphone would be exempt from tariffs. ashley have i got this right? if you build assemble iphone in china an you send it to america we're not going to put a tariff on it. apparently mr. trump told mr. cooke when they met at the white house last month so he said to mr. cooke no tariffs on imported iphones don't worry about it. however, apple still very worried china is hugely hugely important to -- to apple and you know the chinese can do other things. they can mess with the supply chain with apple they can bring in new regulations. already, ford vehicles arriving in china are being slow -- expected thank you and you know

kept behind a ports for longer because of the trade tensions. ening doing that with foreign product and too slow walking things regulatory blockade down 321 as we speak. new "gallup poll" satisfaction with the direction of our country reaching 12-year high 38% of people satisfied with the direction of the company. the country i should say. that implies to me to fund mental, economy is in pretty good shape. >> the the my is in great shape stuart and regular people it is not just top one percent but blue collar, the construction workingers bus drivers they're seeing pickup and wages feel better about their prospects going forward we talked to business owners across the country and said this now for many months people are optimistic than they have in a long time and ting that will continue. >> stunning university of michigan the lower income guys are sending -- that's up confidence for them is up double digits since the beginning of the year. >> that implies if there's a

trade fight tit for at it doesn't have that profound effect on america's what 19 trillion a year economy. >> spending. we're down 328 points. check that big board please yeah down 329 wase spook but that puts us back to the 24,000 level. may i remunged you on the day of the election we were at the 18 thorks level. now it is 246. we've got this from game stop, and may be in talks to go private. that stock was up big time yesterday. remember they're a brick-and-mortar video game retail or how about that? 19 as we speak. score this one for greennies mcdonald's test plastic straw alternatives later this year. do question need any comment on this no we doapght elon musk reportedly e-mailed employees about, quote, extensive and damaging sabotage by and employee what's that about? >> direct.

yeah talking about a disgruntle worker he discovered direct cochanges to manufacturing software also -- reportedly stole the the data and gave it to third parties outside the company. so he's also saying in this e-mail that the short sellers are after us. oil and gas guy, and also simple sabotage by something -- somebody inside the company who is retaliating disgruntledover whatever but searching for this individual but wow, this is a rev la story e-mail to elon muck. not a big impact on stock but down a couple of bucks and already had a terrific go ahead. murphy. >> i was going to say question talked about tesla on the show 290 range and i was the first one to say i think they're going to have a cash crunch and problem here. in the stock sup 70 point from there so far elon musk is still performing. tough -- stuart: admission that you got it young? >> i get a lot of them wrong and i have to get a few more right than wrong and everything works out okay. >> request you show me facebook

please you've been big on facebook and i know you own it but we're up about 195, 196 at the moment -- here. >> possibly a little bit higher than that up to 199 yesterday so still facebook has those two trillion are people out there it is where xans are going to advertise a lot more room to run there. >> behind the that dip. not you have in of a dip yet. down $2 that's it. goldman sachs sees oil peaking about 82 a barrel this summer they say supplies on lowside you agree with that? is this important? >> kind of i don't think it is that important. but up at 82 qowld start to put a little bit of pressure on the economy so it's a bit of a contrarian not up to 82 at all. >> calling oil price is a fool, and it is really so many factors that go into it. it is global supply and demand if you have an edge on that you

should be trading oil. >> it doesn't have that big an impact does it really. if you went to or $120 a barrel yep -- >> a spike and rapid declines that cause problems for different -- >> well said. disneyland in california -- charging customers 300 for a chance to see the new pixar pier attraction one day before it opens. >> seriously. should i sign up for that? >> no -- not very much. monetize in their content maybe. >> you have a whole pass of kids more kids than i have. [laughter] i have six kids i was going to say if you bring your children to disney kind of 300 i think is a price pongt that could affect a lot of people that's a lot of money and you can wait a day to go in and not pay the 300. had a nice move, though, a lot more room to run. we own disney. 106 you think it is room to go. where's the strength? ivelgt strength is from all of their assets they own and content they own and also has netflix going into the streaming majority and they have the

avenger and marvel superheros that's who people want to see and then monetize that with rides in the theme park. >> okay i believe we have some breaking news i'm not sure what it is. they're coming in my ear have we got it ready? do we have it -- now the labor dpght announcing new health insurance options for small businesses, and their family what do you got? >> popped up there. [laughter] what they're going to do labor department this is important development. because what it is going to do is allow small business to do is provide health plans that have the same benefits and same rules as a big large business providers. they save some 4 million americans could be covered by this. preexisting conditions -- still get covered. this is interesting because as you know, small businesses haven't been able to do this but allows them it is called association health plan, ahp, and it could start puts things together start ising?

september. >> let's do that asap sounds like a good idea to me. we've got nicole on the floor of the new york stocks exchange this is important. so what are you telling me about traders on the floor, nicole, what are they doing? >> i went into each booth buy, buy, with buy, they love these dips. it is their opportunity to get this as stocks they like at the a cheaper price. they are not worried i would walk into the booth and so many an say blip and buying opportunity and they would say buying opportunity. sure there was talk about the china and trades and tariffs but front and center more focused on usa labor, economy, growth whereby that's what they're looking at and they said every buy opportunity is come from these dips. and we're seeing some names higher such as chipotle netflix and verizon marketplace is still weak but just a little more and we'll be back positive for the dow jones industrial average 286 is the number to watch. >> this is fascinating because,

obviously, they're watching it this show -- and mike murphy who said buy this dip. thank you very much indeed. unfortunately i have to say good-bye to both murphy and to ben. but your stellar performance this morning, obviously, the world is watching you. >> funny. all right thank you gentlemen. appreciate it. change of pace, the report more revelation here's one exchange between fbi attorneys shortly after president trump won the election. quote, fbi attorney is it making you rethink your commitment to the trump administration? [laughter] fbi attorney two, hello -- and then add joining us now congressman andy arizona republican and member of the house judicial area committee now you're demanding names of the the fbi employees who is protecting them? why don't question know their names? >> not sure who is protecting them but the ig didn't give them to us.

we have they have a bias. we suspect that it effected investigation of hillary clinton and also ultimately led to mueller investigation. we know that there's a whole bunch of them. more than a dozen that were receiving benefits by providing leaks to the the media for pete sakes golf outings, movies, whatever, and they're protect ared. you know, we know peter struck is we know who lisa page is and notorious but other people notoriously acting in that ig report who aren't mentioned and they can't be protected like that. >> i do want to ask you about immigration. house mierpt leader nancy pelosi now she visited detention facility yesterday emotion about this. but i don't see the democrats offering any solutions i see a lot of emotion -- and i think that's probably a winning issue for democrats. but nobody is coming up with a solution. are you with me on this? >> yeah. you're exactly right this is a -- theater it is political theater. it is drama.

ignores facts along border facility but where these parents are crossing and -- they're not some of whom are putting their kids in hands of human smuggler for pete sakes this is theater we need a get the solution and people are offer aing solutions whether it is more bids and whether it is modifying that -- flor res consent agreement we're stuck with and ninth circuit ruling from 1916 there are thingses that we could probably to but since 80% of a request are bogus, just releasing everybody into the interior is a de facto -- amnesty so we can't do that either. >> let's suppose we change whatever -- whether it's a rule or a law, i don't know. but we change it. and we keep familyies together 237 and we bring them in and they get hearings, et cetera, et cetera. that may be the humanitarian way of ending the the crisis. but in any opinion they actually long-term make it is divorce.

because it won't encourage more families to come. we've already got a 300% explosion in families coming in in the last few months. if you take this humanitarian approach and i'm not averse to it you simply make the problem worse. >> well, you know you're -- in the economy like -- incentives drive people and coming here it legally and not through the right way so yeah, i agree with you. if you have a border wall people would not be going to interior between point or ports of entry but going to forts of entry to make their silent claim and more humanitarian of themselves. >> i have to tepid because we have market action here. but sir, congressman look thanks very much for joining us. very, very difficult issue here. but i sense a real crisis is coming on that board and you're from arizona you're going to face it. congressman thanks for joining us, we appreciate it.

thank you very much indeed. lizzy i didn't mean to cut you off what i'm saying is there's a bill and trump has said we have an immigration proposal that democrats have done nothing on this issue. there's a but common sense solutions beyond what's going on in detention center. that's the issue. they don't want a solution. they want more to come in a bigger problem and they think they'll win against trump that's what they're doing. so president said 1 pnts 8 million daca dreamers prevent from showing weapon accessory ads to minors -- how do they do that? >> they alreadien -- banned magazinings but now they're saying that -- we're talking about accessories things mounted on gun like on optic belt accessories. those ads now must be restricted to people 18 and over. i guess they do that through all

l gore algorithms how do they know the the age of the person looking at the ad. but they say they can and that's what they're going to do. check the dow 30 market soap and still down about 300 points and we have 28 of the dow 30 down. only proctor and gamble two stocks up. next a robot and woman square off for first ever public debate between a machine and human. who came out on top? we will have an answer. ♪

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google now has technology that predicts when a patient will die. you better explain this one. >> stunning accuracy within 95% accuracy within 24 hours. in other words, that algorithm they developed they can predict as a hospital patient will pass away within 24 hours with 95%

accuracy. >> so you quack in the door of the er they check you out on the algorithm they say you've got 24 hours -- >> that's right. because here's what they loaded into the algorithm all of your vital signs, old charts and pdf and demographics so -- >> i want to know. move shall we -- okay. to benefit myself and all of our viewers imagine this a robot debating a human. that's what ibm's project debater is all about. and may in san francisco yesterday afternoon i'll roll that tape. >> you think that is not that government money wont help but but it doesn't meet criteria in compared to others. >> if i may put it differently it is like investing in really good tires -- it may not be fun to spend the extra money but ultimately you know both you and everyone else on the road will be better off.

>> well -- [laughter] how do you like them apples joinings now is ibm director research joins us again. would you take me through this -- you start out with a statement by the human person. and then i guess your robot learns from human person and respond is that what's going on here? >> good morning stuart. definitely that's a piece of it. you take the statement and then you construct a full form speech. and then either robot or human can go first and human speakings for four minutes robot listens and then forms rebuttal to that speech in a way that's fully coheernght fully cohesive and can persuade the audience. pretty fascinating was there a decision at the end of the night who won, who lost? >> like in all debates i wouldn't say there was a win, loss but polled audience major of whom were not affiliated with ibm and audience said --

that by and large humans were better speakers more persuasive but the -- but artificial intelligence debater was more knowledgeable and learned from debater than the human speaker. >> what are you going to use this technology for in the future? >> i can see it quite a few cases. one, as we want the public to get more informed onless the legislation as well as the legislators themselves. they could use this to get really informed pro and cons of a political position. or a business executive rather than using people with built-in bias augment what they feel from experience and institution to get and form all of the pros and cons on a decision they're about to make. really i think to -- augment decision nation. >> could i have one in my home because i spent my free time debating myself about the the issues which i'm going to talk about next day on television. could you modify this thing so i

can debate the robot at home? >> absolutely. not just modify, intend to deliver it as a cloud service so you're spot on on being able to do exactly what you're describing. j really you're going to do this. i could literally get out of the cloud to bring it down and debate the robot. >> correct. you could give the robot a position actually you could just listen and give robot a position and argue both size of the position. so you can get the best argument of both sides. >> oh that wouldn't work that just would not work. all right i'm afraid we're out of time but that was fascinating. that really was. i can see the the applications coming a mile off. christian everybody ibm guy we appreciate you being be here, sir. thank you very much. thank you. there's a lot of e emotion i call it uproar on southern border, the democrats do not have a solution to our immigration crisis, in fact, i think it is getting worse. my take on that, next. oh, and there's the closing bell.

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stuart: 10:00 a.m. in the east, 7:00 on the west coast, we have a big selloff on wall street. look at that, down 355. big industrial stocks, boeing, caterpillar, united tech, they have huge exposure to trade disputes. they are the biggest drags on the dow industrials. many other industrial stocks are taking a hit as well. see them on your screens. china stocks listed in the u.s., alibaba, jd.com, all of them, taking a big hit as well. a question we're wondering about, is this is blip or a start of something bigger? we'll ask charles payne very shortly. there is a lot of emotion on the immigration debate, uproar on the border but no solutions. that is what stands out. the left offered no plan to deal

with the border mess. i will deal with the emotions. when children are involved you can expect intense feelings. media, aligned with the democrats is pouring it on. verified recording about children crying for their parents t was played at news conference. the picture after child's hands clutching side after cage. it was staged. the child was not detainee. it was not a detainee. this is crescendo of anger against the president. but i have not heard the left put forward a solution. in fact they are making the problem worse. the sanctuary movement encourages illegals. make it here, you're home free. giving families special treatment has encouraged illegal family crossings, up 300% since last year. asylum-seekers are gaming the system. they know they can spin out and swamp the process. there is a backlog of 600,000 cases, not to mention the

10 million illegals already here. the democrats know all of this, and they don't care. because they don't think it is in their political interests to fix the border. they believe they can use the family separation issue to lock in the hispanic vote in november. by keeping an open border policy, they lock in the hispanic vote in key swung states in 2020. this is dangerous stuff. remember the migrant army that marched on europe three years ago, demanding entry on humanitarian grounds. we're facing a similar situation. the army of migrants is already assembling at our border. what are we going to do? the democrats would let them in. that is not a solution. it's a guarranty that the problem gets worse. the second hour of "varney & company" is about to begin. ♪

stuart: going to start with your money. president trump threatens to impose a 10% tariff on $200 billion of chinese goods goodsterring america. the question is, is this a trade war or another in series of tough negotiating positions. charles payne is with us now. >> president trump intends to the win the trade war. you can't do it halfway. i have to tell you, we focus. we got the market up. show what the dow is doing. we don't know show what is happening on other side of this is china. narrative from the media, so-called financial experts, somehow we're going to lose this. overnight china injected another $31 billion into their economy. they have injected 60 billion this month alone. they are in trouble. their debt-to-gdp will be 320% of their gdp in couple years. last several years they have

used a trillion dollars of foreign reserve assets. this is a country, we could put up their markets, i don't know if we have them ready, shanghai, down 12% for the year. shenzhen is down 17% for the year. from the last three years, from the peak is shenzhen is down 49%. shanghai down 30%. they have serious economic issues in this country, i won't say americans, certainly the media refuses to portray. instead they keep portraying this we'll lose or they will go and focus on farmer having a tough week or a tough year. this is a bigger picture right now than a locker company going out of business. stuart: you make a very good point, charles. i want to turn this around, look at america's market. is this a dip, that is temporary, and will come back when kerfuffle has died down. or is it the start of a longer term selloff? >> i think it's a ditch. i'm salivating at idea of buying

great stocks on a discount. our economy is surging along. it is surging. it's a rocket ship right now. i got to tell you, it is, growing will continue. earnings will continue. the market right now is cheaper now than it was in january. the stock market is cheaper now than it was in january. i think that will continue. so this is something to keep an eye on obviously. it can continue to escalate. it does scare people. it does scare big-time investors who can move the market but the fundamentals of our economy and our market are amazing right now. stuart: charles payne has a strong stomach. he is a brave guy. he will buy this dip. >> i look at the numbers. that is all i do. stuart: yeah, yeah. great guy, charles. change the subject, back to my take, top of the hour at the border. emotions are really boiling over. joining me former trump campaign director david bossie. david, i have had my say. i say the democrats do not have and do not want a solution to the border crisis.

i think it will get worse. where do you stand on this? >> you're exactly right, stuart. do-nothing congress, both republicans and democrats over the last 18 months. these photographs and video, the mainstream media is presenting this emergency, have been culpable because these photos have been taken over the years. we've seen these pictures in 2014 and in 2015. and it is not new to those of us that pay attention to the emergency sy that is illegal immigration. and so kate steinle, let's talk about some of the americans that are victims, that are torn from their families permanently. these folks all want to play on emotion, but the american people understand what is going on here. and it is, look, all of us have big heart. we don't want families ripped apart but these parents are responsible for their actions, and they are the ones who are

committing a felony, a crime, that then gets them separated from their kids. let's not forget if they didn't do that, in the other part of it is, the asylum-seekers. if you're seeking asylum, not just trying to breach the border illegally, if you're trying to find asylum here there is a way and process to do that that doesn't get you separated. i think mark meadows will make that clear today. stuart: i'm interrupting, david, we just got a tweet from president trump. i will read it out for everyone. here it is, democrats are the problem. they don't care about crime and want illegal immigrants, no matter how bad they may be to pour into and infest our country like ms-13. they want win on their terrible policies. so they view them as potential voters. >> that is exactly right. this president once again sees the big picture. the democrats go from emergency to emergency, right?

that is what they do. they offer no solutions. they don't want to have a comprehensive border fix with this president. stuart: let me ask you this, david. what are we, look, i think there is a surge developing, coming towards the border. 50,000 arrests in each of the last three months. that is a growing number coming to the border. what are we going to do if we have an army of migrants march on the border like they marched on europe three years ago? what are we going to do? >> stuart, it gets back to the president's goal of building a wall. look, if parents and children are truly in danger need to get to this country there sis a process in place. that process is going to get better. stuart: if you do get the surge coming to the border, the cries will be loud and long, let them in for humanitarian reasons. these are poor people, they are children, women and children, they will want to let them in. >> stuart, you're exactly right. and our border has to be secure. we can not allow unfettered

access. we can not allow an open borders policy. which is what the left and the mainstream media wants. so these democrats, who are trying to create this emergency by photographs and grandstanding are doing no benefit to the overall effort in trying to solve the serious problem of illegal immigration in this country, whether it is crime, ms-13 or any of the other list of issues that are attached to it. we have a problem in this country, we have to solve it, betting emotional, having the mainstream media jam this down our throats because it is issue, crisis de jure does nobody any good in this country. no american benefits from it. this president's is concerned about, the american people. he have wants to build a wall, end the crazy lottery system, end chain migration. he wants to support the goodlatte bill or another bill

that does those things, fix the problem, so that the democrats don't go from emergency to emergency. stuart: thank you very much, david. left-hand side of the screen, you may be watching this, a new low for the dow industrials. we're off 380 points right at 24,600. that means we're 2,000 points away from the all-time record high. how about that? another tariff story for you. president trump reportedly told apple's ceo what would be off the list of tariffs. come on, let me straighten this out. ashley: no tariffs on imported iphones. that was as a result of meeting between tim cook and the president last month. mr. cook visiting the white house basically to say, if you do this, we're going to be hurt. he got am assurances on imported iphones. china is very, very important market for apple so they're trying to tiptoe their way

around it. a quarter of annual revenue for apple comes from china, $50 billion. but having said that the chinese can actually make things difficult for apple. they can slow down the supply chain, do extra regulations to mess up the -- stuart: dow industrials down 390, okay? we have a big hour coming up for you on "varney & company" as the markets sell off on the latest trade war threats. we'll talk to brian kilmeade. he is always called for the president to take a hard-line on china trade. is happy with what we've got? brian joins us shortly. the president ordering a new branch of the military, a space force, physicist mitch yo kaku says we have to catch up. he is on the show. nigeria scams getting people to fork over administration, or cash over there, hoping to be a

lucky recipient after nigerian prince's inheritance, many fallen for it. one attorney general got the money back for one of his constituents. we'll bring you the story for sure. you're watching the second hour of "varney & company." ♪ brad's about to find out if his denture can cope with... a steak. luckily for him, he uses super poligrip. it helps give him 65% more chewing power. leaving brad to dig in and enjoy. super poligrip.

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stuart: north korea's leader kim jong-un, he is on a two-day trip to beijing as a matter of fact. look at the market, please. that is very close to the session lows of the day, down very close to 400 points. and 27 of the dow 30 are down. they're in the red. only three are up. the price of gold, what is that doing on a day when stocks are down? it is down too, down three bucks. 1277. in holland they are

considering a ban on the burka in public spaces. joining me the president of muslims facing tomorrow rahil raza. welcome to the program. great to have you with us. you support a ban on the burka. do you support a ban on the burka just in holland or how about in canada, where you're coming to us from? >> oh, absolutely i suggested this to the canadian government, my organization did many years ago. i support a ban on the burka in all western countries. i hope this goes through in holland. stuart: why? >> the islamists have been peddling a religious requirement for a long time. it is not a religious requirement in islam. it is not just saying this, the highest senior cleric at a university actually made a declaration it is not a religious requirement.

he asked his students to take off the burka and uncover their faces. when they go to mecca for the hajj, the largest gathering of muslims, they are not allowed to cover the face, because your face is your identity, and it has to be shown. when islamists found out it is not a religious requirement, it is they started backpeddle and push as cultural agenda. the question, whose culture? american, european, canadian, culture, no, it isn't. it's a tribal culture. culture needs to evolve and change. no face for a face covering a security risk in the western world especially in post-9/11 world. stuart: do you think, however that a way of banning the burka is a way of banning anti-muslim sentiment? >> no, i don't think.

i think its the a. this was the same in canada as well. no face covering like sky masks or kalabas. what it is saying that the face needs to be seen. it is accountability and transparency. of course you have muslims who will use this as victim card because this is what they have been taught. they're going to say this is islamophobia, this is racism, this is bigotry. but as a believing practicing muslim woman that it is not. what it's a practical requirement for muslims living in the west to adapt, if they want to wear burqas and cover faces there are lot of countries in world where they can do that but in the west it's a security risk. i know this because i have sign this at airports. just yesterday a kindergarten teacher told me when parents come to pick up the children or when guardians come to pick up the children they must have an identification. now a woman comes in a burqa,

very hard to release the child to the person because she doesn't know who the person is. there is person traveling at the airport. they need to show the identity, match the face to the passport. how are we going to move ahead if this is going to be the situation? stuart: thank you very much for joining us today on what i would call a contentious subject but we hear you, we appreciate your presence today. thank you, ma'am. >> thank you. stuart: yes, ma'am. all right. i was beginning to tell you the story earlier, north korea's leader couple kim is on a two-day trip to china. any idea what this is all about? liz: state media is saying, china state media saying chinese president told kim fully implement the nuclear summit denuking, do it, move forward. this is coming across. overall direction, yes, they want peace and stability. china wants peace and stability on the korean peninsula. kim is there on a two-day trip. this is the third day since march. noko wants china's help getting

rid of sanctions. china is the backstory, they want u.s. troops out. now the other news crossing is, south korea is talking to north korea about getting north korea's artillery, it is massive artillery at the border pushed back or dialed down. so this is real development going on the ground. stuart: let me try to summarize this. china is saying to north korea, and kim jong-un is there at the moment, get rid of the nukes? we're all in favor, you get rid of the nukes? liz: right. stuart: at the same time there is progress in getting rid of the artillery on the north side at the dmz liz that's correct. there is talks with north and south korea on that. stuart: that sounds like progress to me. i don't want to be duped on anything. here is what is coming up, tesla's elon musk alleges sabotage within his own company. full story coming up. ♪

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tesla, damaging sabotage, correct code changes to manufacturing software and some disgruntled took large amounts of tesla, information and data gave it to third parties. elon musk was saying be on the lookout. we're trying to ramp up production of model 3. stuff will go on. we're under attack by show short sellers. ashley: one of the analysts, says they looks like they will reach the goal of 5,000 model 3s by the end of this month of the question, can they sustain it? they raise questions about that, they believe by the end of the third quarter they will indeed pumping out 5000 tesla 3 models a month. so they have made a lot of progress. they also say that they believe the tesla will be in free cash flow positive by the fourth quarter, which is unheard of for tesla that burns through so much money. stuart: that is what they say. even so i see tesla down $20 a

share. that is over 5%. they're back to 350. they have come down heavily. liz: china trade. ford and gh are down. stuart: tesla has interests in china. they want to produce there. they may be caught up in the china trade dispute. down $20 on tesla. the market is down nearly 400. the there is a selloff on the president trump proposing additional tariffs on chinese goods. momentarily brian kilmeade will join us. he always want ad hard-line by president trump on china. he has got it. how does he feel about it now? kilmeade is next. ♪

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♪ she tells me all the time you know, she said so. ♪ stuart: we like the beatles. they're trying to cheer me up. no-go. look at this. low of the day, folks, down we are 414 points. that is 1.6% down. the big techs, all of them sharply lower. facebook, amazon, apple, alphabet, microsoft, all on the downside, more than 1% down. however we got a winner here. i think it is on the upside, yes it is. netflix. piper jaffray raising the target price. says it will go to 420. gbh, a investment research term, they say it will go to 500. netflix is one of very, very few winners across the board today,

up 73 cents. stay on the market. i will bring in scott shellady over there in london. the big question, is this again wine trade war and we're in it or one more of a series of tough negotiating positions? scott, you're from tjm europe. you're over in london. what do you say? >> i still say i wouldn't hear any argument saying otherwise. they are taking advantage of us. we're not starting a trade war. we've been in a trade war. this is just tough negotiations. take this back to common sense once again, stuart, right? what better time to stick to your guns and take it to them with a 3.8% unemployment rate, cpi, ppi getting real hot as of late, economy doing very well, even though we are gone off today, stock market flirting with all-time highs, whether better time to push the issue than now? it is common sense to me. stuart: i understand. that is an argument being made

by misdemeanor people. we're so strong, we have a 19 trillion-dollar a year economy. we can absorb the impact of some tariffs coming at us. we can absorb it. that is your argument? >> yeah. i'm not quite sure that, at least donald trump thinks that china might be a paper tiger here. they have a lot of things up in the air right now. they're not on steady footing at all. i think they are the ones that have to really worry about blinking in this, number one. number two, they're still taking advantage of us, $300 billion a year of intellectual property rights. there are still some things going wrong that need to be sorted. this is great time doing it. ultimately that donald thinks, i absolutely thinks he has got them here and they might be a paper tiger. stuart: market showing off a big decline. stocks down 400 points as we speak. is this just a blip and we recover quickly and this might be the start of something bigger longer term?

>> i'm saying it's a blip but i won't say we will recover quickly but i think it is blip and this is why. i think the market is used to donald trump and used to his machinations. if there is big selloff, it will not be donald trump related. something comes out of europe or the emerging market sector but it will not be a donald trump thing that takes this lower. it will be something nobody saw coming because they have been focused on donald at this time. stuart: i read "the financial times," it's a brittish newspaper that goes around the world. it is that pink paper. i'm sure you see it in london, scott, they are adamantly anti-trump, vehemently anti-trump. is that pretty true of mess of the elites across europe? >> yes, for the elites, stuart, mark my words, i hear it on radio shows, i hear it in other newspapers and i hear it on the street. these people would love to have somebody that represented their country like donald trump is representing america. they hear my american accent.

can be in a lift or elevator or escalator, wherever i'm at they ask me about my leader. i say he is doing a lot of right things. to a man, they ask me i wish we had somebody that had our back. stuart: that is revelation that we do not hear, that they universally condemn us. you're telling us opposite? >> i am. i listened to a radio show yesterday afternoon after work. what is happening to immigrants and children on the border in these cages. seven out of 10 callers called up, they might not agree how it is filmed what they're doing with children in the cages but they absolutely agree with some sort of immigration problem we need to solve. a lot of folks are coming in support of donald trump, president trump doing something. we just don't hear it. the elites are running all the media but the man on the street would love to have somebody run this country like donald trump runs america.

stuart: stay where you are, scott. stay in london. do not come back to america. we need you over there to tell us what they're really thinking over there. because we don't get it from anybody else. that's a fact. >> i hear it all the time, especially from the cab drivers. they are the guys that know. it is across the spectrum, it really is. stuart: i don't care what they say, scott shellady, i think you're all right. good stuff, scott. we do appreciate it. i do want to get the story in, it is about amazon and their alexa. it may one day be in your hotel room. ashley: maybe sooner than you think. marriott signed a deal with amazon to have through the amazon echo have alexa available in your hotel room. you can contact services like in-room dining concierge, front desk, housekeeping, say alexa, in stuart varney's case, alexa, book a spa appointment. can book for wine. stuart: can you turn it off?

ashley: well that is the question, isn't it. you can say alexa turn yourself off you about does she? liz: unplug it. stuart: i don't want it. in five seconds i can legitimately bring in brian kilmeade who is right now joining us, 10:36. welcome back. good to see you, son. >> great to see you. stuart: for a long, long time you always said president trump should take a strong line with china on trade. well that is what we've got. are you happy? >> yeah. because this is one thing that can unite democrats with republicans and has. this is one thing that he has been talking about since phil donahue show. you were in new zealand at time. i will get you a copy on vhs he was talking in the 1980s, when he was best-selling author and rising millionaire about the need to take on china. and now he is doing it. another check on his box. now is approaching it the correct way? i don't have the depth of knowledge of your panel but he says now, $200 billion in

tariffs. they say in terms of commerce, china can't respond. they will start holding up perhaps our goods at ports, delaying approvals but we're doing something europe doesn't have the guts to do, the democratic presidents and republican presidents haven't had the stomach to do, we're taking them on. i hope they have the end game, because they're happening so quick right now, tariff to tariff, this ping-pong, pun intended is happening so quick they can't negotiate. would i do that, go say let me into the tpp under my terms because that was a hedge against china. stuart: quite possible that china has more to lose in this than we do. we have a robust economy. 3.8% unemployment. $19 trillion a year or thereabouts. china, if you look at their stock market, huge losses overnight. i think they are genuinely worried that we may have the upper hand here because we're dealing from a strong suit, a

strong economy. >> stuart, i have to go back to watch the tape tonight but am i winning you over? stuart: yeah, you're close. i think this is one more in a series of tough negotiations. and i think the president should stick to his tough line. don't give in. but at the same time, you have got to come to an agreement at some point. lower the temperature that will be very difficult to do because neither side can lose face. that is a very important concept in asia. >> right. keep in mind too, as pointed out to me over the weekend by a trade official, they got to an agreement with australia, came to an agreement, came to an agreement with south korea, came to agreement with argentina over restructuring trade, rebalancing trade, not necessarily win or loss. personally i don't know if we should fight the eu, mexico, canada, china at the same time, that gets me a little nervous but i think the president says i'm going to do it.

i will be fearless about it, because i care about america's balance first. when you cut a deal, i don't necessarily think you have to win and the other guy has to lose. stuart: we could all win, we could. increased trade, we all win. brian, i'm sorry, i'm out of time. i got very important guests coming up. >> real quick, the 90th minute, england wins, 2-1. did you see the game. stuart: i did. i did. i'm hoarse from cheering. i knew you would get it in. kilmeade, you're all right. see it soon. how about this? a tax revolt one state supreme court to keep millionaire tax off the ballot. it was in massachusetts, can you believe? we'll deal with it, i promise. president trump wants a new branch of military, a space force. famed physicist, michio kaku tells us the pros and cons

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♪ ashley: former reagan chief economic advisor martin feldstein says that the purpose of tariffs, not about reducing trade deficits. they are to convince china to stop stealing intellectual

property. >> tariffs are, how is it going to end? only if they cut our bilateral trade imbalance? that is not a big deal. that doesn't change much for the u.s. economy. if we get them to stop stealing technology, you know how they do it, say to american companies, we have 1.4 billion people, a good market. tough find a chinese partner. when you find the partner you have to give them your technology. we've said that we have filed a complaint with the wto. we have said that is unfair practice against wto rules. that is what we should be negotiating. ♪ so you fell asleep faster. i sensed you roll over and automatically softened your side to melt away pressure points and keep you sleeping blissfully. at 2am, this happened. so, i took care of it.

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stuart: we're off the low of the day but not by much. we were down 400. now we're down 383. president trump wants to establish a sixth branch of the military, a space force. roll tape. >> our destiny beyond the earth is not only a matter of national identity, but a matter of national security. so important for our military, so important and people don't talk about it. when it comes to defending america it is not enough to merely have an american presence in space. we must have american dominance in space. stuart: joining us now, the

perhaps best known physics professor in all the land, michio kaku. he is our guest this morning. welcome to the show. >> glad to be on. stuart: there are obviously pros and cons of a space force. why don't we break it down, start with the pros? >> the space force idea cuts both ways. let's not be naive, the chinese, russians, they have secret space war plans. the chinese 10 years ago blew up one of their own satellites to prove that they have killer satellite technology. in march, vladmir putin announced a new weapon, the hypersonic drive weapon which we don't have, but they boasted that they have. stuart: so you're saying we have to catch up? >> so on the pro side we're talking about a new pax aamericana. let's make america great in outer space. we would be the cop on the block to make sure there is no petty disputes. that making sure that commerce

and technology flows throughout outer space. stuart: is that how the president sees it, we are the good cop in space? >> as far as president trump, we are the good guys. we're the john wayne. we set the rules to make sure that criminals and thieves and terrorists don't get access to outer space. the space lanes are kept open for commerce. stuart: okay. we haven't even talked about cost but let's not. the pros are there, you put them out there. how about the cons, the reasons not to do this. >> even a small state like north korea, in principle could detonate a hydrogen bomb over kansas and wipe out our satellites. we're most vulnerable to satellite warfare. electromagnetic pulse would not just knock out satellites but our power systems. we would be thrown back by magnetic pulse, maybe 200 years in the past. stuart: form a space force to stop that kind of thing happening? >> the enemy could field one. there could be a space race, a

space race to perfect the first emechanic troh magnetic pulse weapon. like the great equalizer, like the colt 45. one atomic bomb could paralyze a space nation because we have no defenses against the electromagnetic pulse. stuart: that is the opposing argument, all about the electromagnetic pulse. doesn't seem like a powerful argument to me? >> does mean small nations have a great equalizer. they can cause chaos in outer space. we're the most vulnerable to space war. not the chinese, the most russians. we have the most gps systems, telecommunications, internet. commerce takes place in outer space. stuart: small nuclear weapon, electromagnetic pulse knocks out our gps and our phones, that affects us more than other countries? >> right it is like throwing sand in the enemy's eyes. even if you have all the

firepower and gun slingers, you are blind. you can't see what is happening. even a small nation can do that. stuart: longer term, it is not just about the immediate earth's atmosphere, it is about a space force, literally a space force that launches forth into the great unknown and controls other planet as well. am i dreaming here? >> let's take a look what is happening on the ground. the chinese announced they too want to put their flag on the moon. so we could have a traffic jam around the moon with different nations competing for territory. we may need a new outer space treaty of 1967. that treaty banned nuclear weapons in outer space but had a loophole. and that loophole was, non-nuclear weapons are allowed in outer space. that is for example, a barrel of nails, detonated in outer space could wipe out hundreds of communications satellites. even a barrel of nails can create enough shrapnel to paralyze a communications systems which are not

reinforced. stuart: make the judgment, you would form a space force? >> i would look at the outer space treaty of 1967, close the loopholes. stuart: okay. >> it is cheaper, cheaper than creating a whole new bureaucracy and then we can look at the table to see what the chinese are doing and what the russians are doing. stuart: michio kaku, don't be such a stranger. come back whenever you're allowed to come back. we appreciate it. thank you. i'm sure you heard of those ninian scams known as nigerian prince scams. ashley: waiting for my money. stuart: getting people to fork over credit card information or wire over a butch of cash. it happens. you're lucky to be the recipient of a nigerian prince. those are many of the scams. one attorney general got money back for one of his constituents. now that is news. we'll be back. ♪

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i will get to the nigerian scams in a moment. the a kansas judge tossed out a voter i.d. law, no need to show

proof of citizenship during registration. eric schmidt, the kansas attorney general. a set back for you, sir. >> we're dispointed. the secretary of state's office in coons sass has been handling the case. not the outcome we would hope for. stuart: a register to vote and i don't have to show my passport, american passport or anything else, i'm here, that's it? >> essentially that's right. the state statute passed with huge bipartisan majorities in the legislature that required documentary proof of citizenship is now on hold and enjoined by federal court order. stuart: i want to deal with that quickly to bring on this. everybody heard about these nigerian scams or the nigerian prince can give you millions in inheritance money, that scam. happened to somebody in your state. you're getting the money cac, that is unheard of. tell us how you're doing it.

>> we love consumer protection work when it is done right going after crooks and frauds. we hear about the nigerian scam, grandparents scam, we roll our-eyeds, because the bad guys keep doing the same thing because they make money. happy story with one gentleman. settlement with western union couple years ago where western union had been we allege involved in the some of the scams or turned a blind eye, they agreed to pay refund, people ripped off, wired money to the scammers and then filed a claim for refund. we went out and beat the bushes in kansas. we searched for people. we mailed 25,000 letters to kansans who wired money by western union in order to get to that small number whose wire transfers were scams. we got a lot of money back, about a million seven for 350 kansans. headliner was a gentleman who had lost $110,000 to the nigerian prince scam and he is

going to get that money back. >> tell me again, who did you get the money back from? was it the nigeriaians? >> this money came back from money set aside by western union. that is why this was able to work in this case. once the money is wired overseas, it is almost impossible to track it down to get it back. in this case, because of the middleman having been involved, there was a pot of money we were able to go and get this fellow his money back. stuart: i have got 30 seconds. did you ever find out why this particular gentleman wired $110,000 to nigeria? >> he was trusting. he was approached by scammers. they told him they needed his help to get money moved onshore. trusted them. helped them. went to the airport to meet them. when they didn't show up he knew he had been ripped off. stuart: sir, that is an astonishing story. i never expected to hear that ever. eric schmidt, ag kansas, you did it. thanks for joining us.

>> thank you. stuart: yes, sir. here is what is coming up, you remember this, i'm sure you do, the migrant army marched across europe or into usual rob three years ago. angela merkel's open border policy. could be a lesson for america here. steve hilton on that next.

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>> i think the market is overpriced quite apart from the trade issues because i think we've had a decade of super low interest rates which have pushed stock prices way out of line. >> if if we see trade be disrupted, that is a a major event. we're getting ready to load up the shorts. we haven't put them on yet -- >> this is a blip. stuart, we talked about oil moving up to 70, that was going to be an issue, the ten-year crossing 3%, that was going to be an issue. the focus will come back to the u.s.

stuart: okay, interesting stuff. that was our market coverage earlier today right as the market opened, 9:00 this morning. 9:30, it opened, we were on the air at 9:00. now it is 11:00, and we were close to the lows of the day, down 400, but we've come back significantly, now we're down 330. the issue is still the same as it was at 9:00 and 9:30, and that is trade. president trump is threatening a 10% tariff on $200 billion worth of chinese goods coming to america. that's the issue of the day, that's why we're down 300. quickly take a look at interest rates. we're at 2.89% on the ten-year treasury right now. interest rates down as money flows into treasury and gets the yield down and the price up because it's a flight to safety. john layfield, with "the layfield report," is with us now. same question as i've asked everybody this morning, is this

just a blip, or is it the start of something big, this market selloff? >> i think it's a blip. look, we were hoping -- i think the market's hoping, i'm hoping that these ill-advised tariffs are just a negotiating tactic. i don't think it's going to work, i don't think it's going to go after the intellectual property theft that we're having with the chinese. we're hoping this is just a negotiating tactic. we want this market to trade on fundamentals. 35-40% is directly a result of the trump tax cuts, and this has given a new life to the economy, the surge in the economy is because of these tax cuts. that's what you want to trade on. this potential of a trade war is a huge black cloud right now. stuart: most of our analysts, the market people earlier on the show today, agree with you that it is, indeed, a blip. we'll have more on that in a second. the market is coming back a bit, now we're down 324. stay there, john, i'll get back

to you. our next guest has a column on foxnews.com. the title is how to win a trade war with that. the writer -- with china. the writer is peter morici. how do you win a trade war with china. >> in a very different way than donald trump is prosecuting his trade war. you need to get your allies online with you. we're applying sanctions on china, you know, the tariffs, changing the rules on their investment miss the united states to get them to change behavior. it's not much different than we did to iran or north korea, we want them to change our policy. ouring -- our allies are annoyed with us, and he's making it easy for china to retaliate. i don't think these prices are going to have a big effect on -- these tariffs are going to have a big effect on prices. however, the potential for an american humiliation is very large. i think that donald trump's going lose this one. stuart: hold on a second,

because america is coming at this from a position of strength9. our economy is very, very strong. china has its problems. and when you look at the market reaction on both sides of the pacific here, our market is down, what, about 1% tops, just over -- 1.3%, it's down. some of the chinese markets, one was down 5% overnight. i think we're coming at this from a position of strength. we could see china lose, but you're going to say no to that argument. >> no, i think china can withstand this. 10% tariff is not a lot of tear i have. produce -- tariff. producers can absorb it, the government can underwrite some of it. they're not going to like it, don't get me wrong. markets are behaving the way they to do because of the constant drum beat that says, oh, a trade war is the end of the world. this is not exactly smoot holly,

it's not that magnitude. let's face it, markets don't like change, any kind of policy change whatsoever, so this disrupts them. however, i do belief china can withstand this because trump is not hitting them hard enough, they'll be able to go around him by going to our allies. and as a consequence, you know, he's isolated america. he's handled this thing very badly. stuart: okay. we hear you, peter morici, thanks so much for your contribution. i want to go back to john layfield. what would you buy in this market? what do you like? >> two stocks i like, chinese stocks, alibaba and jd.com. i own them both. they're in a war just the same as amazon and walmart are in in the united states and around the globe. they have 60 prkts 25% of the online shopping. that is where the growth is going to be, especially with the one belt, one road initiative with china. they're going to dovetail wherever china goes,, tending

their influence, they're -- extending their influence. i think both stocks are a buy here. stuart: because there's a dip you are buying. both are down. got that. do you also like disney? is that what i'm hearing? >> i do love disney. wakanda forever. you look at what time warner did with dc comics, their last justice league wasn't that good. you had the incredibles come out, this black panther movie come out. i think they end up winning the bid for fox assets, especially sky and star inya. that's -- india. that's going to be huge for them along with hulu. they're going to control that streaming network. this is all about streaming, and i think disney is a terrific buy here. stuart: one more, and i know you like chevron. tell me why. >> it's all about macroeconomic

politics around the globe. you have libya taking oil offline because of political problems, same with venezuela. you have an 11% replacement ratio of oil reserves for all the oil majors around the globe. chevron had a 35% gain alone, alone,155% replacement ratio total. their earnings came in at $1.90, they're absolutely blowing things away right now in the oil majors. i think the oil majors are a buy here, and i think chevron is the best. has a decent yield at about 3.6%. stuart: okay. i believe you are selling -- well, i'm sure you're selling a couple of stocks, but in particular at&t. what's the worry with at&t? >> it's all about debt. this has been a dead company for yees. i -- for years. i own it currently, i'm very bearish on, at&t.

they're going to have about $180 billion after this time warner acquisition. they're losing market share to t-mobile. it's been the one cell company that has done really well the last few years. this is the last thing for the company to do. i think short term this massive amount of debt that at&t is loading up on the company is going to depress the stock for a while. stuart: we hear you, john, thanks very much, indeed. a couple of other markets we always check for you. bitcoin, up $26. $6,733. not much action in bitcoin these days. look at the price of gold. when the market's selling off, gold is actually down $3 at 1276. ashley: yeah. normally another safe haven. stuart: yeah. price of oil is down. the opec meeting starts tomorrow. whether they raise or lower production, i don't think at this point, but the market says maybe they will raise production. ashley: yeah. stuart: it's down a buck at $64

a barrel. how about the price of gasoline? it keeps on edging lower. today we're down a bit more. the national average is $2.88 per gallon. house minority leader nancy pelosi and other democrat toured the southern border yesterday. took no time for her to come out and slam the president p. next the california republican party chair, does this hurt the gop in the california golf's race? and speaking of borders, angela merkel could be out maybe this week, she's been hit hard by her own open border policy. steve hilton is with us. is there a lesson for america here? first, though, the new york state assembly passed a bill that would bring single-payer health care to the state. one study estimates it would cost $92 billion in tax hikes. betsy mccaughey, the voice of reason on health care, she'll break it down for us next. ♪ ♪

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stuart: new york state general assembly passed a bill that would bring single-payer health care to the state. one study estimates that will would result -- that bill would result in a $92 billion tax hike. let's get some passion into this, shall we? betsy mccaughey is with us, she's the author of "beating obamacare." what's this all about? >> oh, i've got the bill right here, and it shows how extreme the democrats in new york state actually are. this bill is not about covering the uninsured. i'm for that. this bill outlaws all private health insurance. so 10.5 million people in new york who have on the job coverage, union members,

corporate executives, would be faced out of their -- forced out of their plans into a a medicaid for all system. these union guys who have given up cash wages for years for these fancy health benefits would be cooling their meals next to the -- cooling their heels next to the guy on up employment. stuart: and eradicate all private insurance. >> oh, yes. and that's not even the human cost. stuart: it's not going to happen. >> the world-renowned orthopedists and neurologists and cardiologists who work at the great academic medical centers in new york, they're going to take that flat new york rate for pay instead of to getting their fees? no. they're going to to go to houston, cleveland, boston. stuart: betsy, let's get real, it's not gonna happen. >> but where is the greater new york hospital association, where are the unions, where are the doctors, the medical association of new york state? why aren't they saying something about this? this year democrats have a

majority in the new york state senate, and you've got a democrat in the governor's seat, andrew cuomo, who wants to prove his progressive bone feeds in time -- bone feed d.c. for the presidential primary. stuart: it's never going to happen. >> i hope you're right. stuart: the labor d. p is unveiling a new plan allowing individuals and small businesses to band together health care coverage for employees? >> yeah, that's right. it's very good news because obamacare was so hard on small businesses. they were forced to provide this one-size-fits-all coverage that was too expensive. now they'll be able to i buy plans that are tailored to their work force. stuart: this is good news. >> this is very good news. stuart: so where's your passion, for heaven sakes? [laughter] stay there for a minute. i just want to alert our audience that alexander acosta will be on fox business at 4 p.m. today. he is the labor secretary, i'm sure he'll be talking about that new plan --

ashley: correct. stuart: now, let's get back to betsy. now, here's an opportunity for real passion, betsy, have a go at this. a millionaires' tax in massachusetts, it will not be on the ballot. >> no, that's right -- stuart: and the supreme court, look at there, 5-2. >> yes. it was defectively drafted. you're going to see fewer of these taxes. you know, connecticut has one, new york, new jersey's going to have one, california has one. but the effect is it's probably good politics for some politicians, scapegoating the rich. but the fact is it's such bad economics. the states that have these taxes their workers, their taxpayers are leaving in droves. these are the states that are losing congressional representation in the next census because everybody's leaving. stuart: but in massachusetts, of all places, you can't do that. it's not going to be on the ballot. [inaudible conversations] >> it's a big win for rationality. [laughter]

stuart: it's a loss, because in the great state of new jersey the governor is going for a millionaires' tax. >> oh, yes. murphy, he's very far to the left. stuart: you're telling me. >> he lost a page. [laughter] stuart: thank you, betsy mccaughey. we love your passion. breaking news, headlines from peter navarro, one of the president's top trade advisers. here's what he says: china has more to lose in the trade dispute with us. he also says president trump has a great relationship with china's president xi and will work with him to resolve trade. navarro says the trump administration will choose chinese products for possible tariffs in a measured and fair way. navarro says he has no knowledge of all comment on speculation that apple has secured an exemption from tariffs of chinese goods. that's just in from peter navarro, and this news is just getting out. ashley: yeah. stuart: at the moment, there is no impact on the moment.

still down about 340 points, 1.3%. let's see what happens when that news from navarro sinks in, we sal she. gamestop, it was up big yesterday, they are a bricks and mortar video game retailer, but i'm told the youngsters love to hang out and buy used games at a discount price. got it. score one for the greenies, mcdonald's is going to test plastic straw alternatives later this year. the stock's down in an overall down market. amazon's chief, jeff bezos, he is now the richest man in the world by billions and billions of dollars. we'll tell you how much that a man is worth. hard to believe, but we'll tell you. ♪ muck measure -- ♪ ♪ ♪

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. stuart: moments ago peter navarro put oa statement, covered a lot of ground. basically he said that china's got more to hughes than america in this trade -- to lose than america in this trade dispute. he also said that president trump has a good relationship with president xi and things could be worked out.

that has had an effect on the market, we were down 340, now we're down almost exactly 300 points. maybe some impact from what mr. navarro had to say. then we have amazon's chief, jeff bezos, he is number one on the "forbes" rich list. his net worth is now, wait for it, $142 billion. [laughter] his fortune grew by more than $5 billion this month. microsoft co-founder bill gates, distant second. he's all -- he's a pauper at $93 billion. pauperrer, you like the british accent? tesla's chief elon musk warning about sabotage within the company. he sent an e-mail to workers claiming an employee changed code for tesla's manufacturing system and passed sensitive data to third parties. an investigation is underway. tesla's stock though is down. separately, musk is warning short sellers, the people who think the stock's going to go down, he's warning them tesla's stock that positions will,

quote, explode when tesla releases its latest production forgets for its model 3 in three weeks' time. tesla says it will be able to make 5,000 model 3s per week by the end of june, but the stock is still down $16. that's over 4.5%. jetblue founder david newman, he wants to start a new low-cost carrier. he's reportedly trying to raise $100 million to moxy off the ground. it's going to debut maybe by 2020. he launched jetblue in the year 2000 with, he left the company ten years ago. a bombshell out of yesterday's inspector general hearing. james comey is underinvestigation for mishandling classified information. judge napolitano on all of that stuff after this. ♪

stuart: comeing back a little. we were down 400, now we're down 300. we've got a few more winners amongst the dow. we've got, actually, seven of the dow 30 are actually up as of

right now, but the underlying problem is still the same, and that is trade with china. down 307 as we speak. now this, angela merkel could be out as germany's chancellor this week, maybe, done in by her own open border policy. president trump tweeted about this today. here's the tweet: crime in germany is up 10% plus. officials do not want to report these crimes since migrants were accepted. other countries are even worse, be smart, america. look who's here, steve hilton, he's pretty good. he's the host of the next revolution, he's got a british accent -- [laughter] >> too many of us. >> we're outnumbered. stuart: quiet. [laughter] three years ago angela merkel opened up the borders to a horde of migrants who flooded in, and it destroyed her chancellorship. what's the chance of something

similar happening in america, a huge crush at the border, the democrats is say let 'em in on humanitarian grounds and we've got a problem? >> there's a really big lesson from the disaster that was caused by this policy which really destabilized not just her own political position, as you said, but the whole of europe. you're seeing the ripple effects of that right the way through europe, it was reflected to a certain extent in brexit. the big lesson for america is this: con sent for immigration. i think a lot of people would say, look, we're all for immigration, we're all for being compassionate to those who are really suffering, but consent for that immigration depends on control of immigration. if you lose control of immigration, if people get the sense that no one is checking whether the people who are coming in have the right claims, whether they really can make a contribution or where they're trying to scam the system, there's this sense that it's all out of control, then there's no consent. that undermines all faith in democracy and government, and

that's what we're seeing in germany. stuart: at the moment we've got this border problem, the separation of families, and it is, to some degree, a humanitarian problem. think of the children, let 'em in, that's what the democrats are saying. that will make the situation much worse, i think, because you're guaranteeing a future flow of families and my grants coming to the -- migrants coming to the border. >> this is another example of it, it's out of control. it's another example of a big, big problem that's just been festering for years, if not decades, the broken immigration system. you've got to overhaul the whole thing is so you can check people, you can get them through the system, and if they're not right to come into america, deport them together as families quickly. stuart: now, i've been saying that maybe angela merkel loses power this week because a major partner in her coalition government is objecting to her immigration policy. would it be fair to say that immigration has wrecked the european union? >> yes.

it's the key issue. it's driving all of this populist sentiment which was reflected in the brexit vote, you saw it in the italian election. look at the impact. there's an amazing piece of data that was published this week. youth unemployment in italy, the youth unemployment rate in italy is 30%. one in three young italian people are unemployed. and one of the things that they blame is the influx of cheap labor just as you're seeing everywhere else. and so this is a huge problem. it's a big change in how the world's operating. you've got cheaper international travel, you've got communications and the internet so people can see what life is like in other countries. this is a modern problem, but we're still using the old-fashioned solutions. stuart: is it possible angela merkel will be out this week? >> who can predict? these coalitions are so unstable. she's running around europe now, other governments, trying to bail her out. she's running around to neighboring governments and saying, look, my own coalition partners aren't going to let me do this, can you help me out by

taking some of the migrants that we've let in germany? she's trying to get bailed out by other governments. ashley: merkel is fighting those who say germany first, taking a leaf out of president trump's book and saying we need to have a german policy. she's saying we need to have an e.u. policy. >> right. and by the way, this is much closer than that, it's the christian social union, practically an offshoot of her own party that's saying this. stuart: i've just got 20 seconds. we had a guy joining us from london this morning, he's a market watcher. he's an american, lives over there. he said, look, ordinary people in britain are beginning to say wish we've got a guy like trump -- >> not just ordinary people, boris johnson. he said if we had trump running -- stuart: boris the boris. >> certainly not an ordinary brit, that's for sure. stuart: thanks for joining us, sir.

much obliged. the judge is with us, and before i get to the kansas city supreme court or a court vote aring id, voting down the id law, i've got to talk to you, judge, about the hearing which is going on in washington now on horowitz and the fbi chief. you're telling me that the democrats are not talking about this at all? they're talking about children at the border in that hearing? >> they're talking about both, but every democrat who has spoken so far has followed their playbook of segwaying from the inspector general's report into here's what's happening at the border, and we can't tolerate this. stuart: it's nothing to do with it. >> agreed. and apparently congressman gowdy who is chairing this hearing -- and it's two committees, it's the house judiciary committee and the house oversight committee, 74 questioners, members of the two committees. he's decided to let this go. under the house rules he can gavel it down when they get off on another subject.

congressman elijiah cummings, who is the ranking member, the ranking democrat on the house oversight committee, openly wept during his own opening statement decrying the conditions in what he calls internment camps on the borders. so, obviously, this is part of the democratic playbook to use fox news and others who are televising this gavel to gavel to get their message out about this issue which, of course, is utterly irrelevant. not a thread of connection to the reason for which they're there, which is to examine the inspector general on his 560-page report. stuart: it's amazing -- >> it's actually brilliant politically. stuart: yes. >> and they must have known that congressman gowdy could allow them to do this, because they're really push -- i hate this phrase -- pushing the envelope. stuart: however, chairman gowdy did get his 25 cents worth in about mr. cummings. hold on a second, judge.

i think we've got the sound bite from trey gowdy. roll it, please. >> this inspector general's report should conjure anger, disappointment and sadness in everyone who reads it. this i.g. report lays bare the bias, the animus, the prejudging of facts by senior fbi agents and senior attorneys. and attempts to minimize and mitigate this bias are so antinet call to what we want and deserve in our law enforcement officers. >> he is commenting directly on inspector general horowitz's testimony and trekker wray's testimony -- director wray's testimony yesterday. chris wray, the fbi director, was scorched by senator orrin hatch, a fellow republican, for attempting to minimize the bias in the fbi bay saying it was -- by saying it was a dozen people and we have 37,000 employees. and hatch was outraged, what do you mean it was a dozen people? it was the dozen people running

the fbi. stuart: exactly. >> that is what trey gowdy was talking about. chris wray's not testifying today, it's just michael horowitz. stuart: okay. i want to get back to this kansas city id thing. a federal judge struck down kansas' voter id law. it's a lady judge, and she called it unconstitutional. all right, listen -- first of all, judge, listen to what kansas' attorney general said about the ruling on this program. roll that tape, please. >> state statute that was passed with huge bipartisan majorities in our legislature that required some documentary proof of citizenship is now on hold and enjoined by federal court order. stuart: sort it out for us, go. >> okay. so the state of kansas is concerned about non-citizens voting. and they enacted a statute requiring you to show citizenship, typically a driver's license because in kansas you have to be a citizen to get a driver's license or a passport. federal young struck that down on the -- judge struck that down on the theory that requiring

people to prove citizenship is an impediment to the right to vote. not only -- stuart: that's ridiculous. >> -- did she streak it down, she -- strike it down, she ordered the secretary of state of kansas, himself a lawyer and the republican candidate for governor, to undertake remedial legal education many in basic constitutional principles. this is a personal ad hominem attack from the bench which is arguably violative. you can't call the lawyers stupid or go back to law school. that's basically what she did. stuart: appeal and strike down that ruling, let's hope they do. >> hopefully. perhaps not in time for this november's elections though. i'm sorry to disappoint you. stuart: i tell you what, judge -- >> i know, lawyers are ruining the world. if you get boris johnson here,

you'll really outnumber e. mac and me. [laughter] stuart: thank you, judge. a smile out of me. [laughter] an initiative to a raise the minimum wage at disneyland to $18 an hour will be on the november ballot in anaheim, california. if it passes, disneyland would have to raise its wage to $18 an hour by 2022. i've got one more headline from disney. it's offered $2 billion to fund sky news for 15 years. sky is one of the assets that disney and comcast are vying for. got that? nancy pelosi and other democrats toured the southern border near san diego yesterday. coming up, the head of california's republican party, jim breulty. i'm going to ask him, does that issue -- children at the border -- hurt the gop in the california governor's race? we will cuts -- we will discuss. ♪ ♪

♪ ♪ >> a new 10% tariff on $200 billion worth of chinese goods, well, that has been threatened by president trump anded his administration, and that spooked the market to a certain extent. right now stocks are coming up off the lows. dow had been down 419 points, and right now it's down just under 300. but industrials and materials

continue to be the big laggards. you can see anything from keep call calls to met calls -- chemicals to metals and also aerospace with boeing down 3.3%. and then we take a look at those that export, look at. ford motor and general motors also lower and tesla has its own underlying story about internal sabotage. it's down almost 5%. but there are some notable winners and some names you know including biogen, verizon, netflix and ebay. more "varney" coming up.

stuart: ah, california health officials say coffee is not a cancer risk. they want a new regulation, though, that would nullify a recent court ruling that says cough fear, all coffee sold in the state has to have a cancer warning label. a review of a thousand studies finds insufficient evidence of coffee causing cancer. good. house minority leader nancy pelosi and other democrats toured the southern border yesterday. listen to what she said. roll tape. >> the american people are opposed to separating families. they understand the importance of the relationship between children and their families, the damage that can be done to children's brains by the stress that is added by this separation. the list goes on.

but also the fraud of the republicans saying they're going to correct this in their bill when what they have in their bill makes matters worse for children. and those bills must be rejected. stuart: joining us now is jim brulte, chair of the california republican party. all right, jim, pelosi's visit to the border, a lot of emotion there. do you think that hurts republicans in the california governor's race? >> i actually don't. look, it breaks everyone's heart when you separate children from their parents, but i just don't remember mrs. pelosi showing that much emotion when children were separated by their a participants who were -- by their parents who were kill by people here in this country illegally. if nancy pelosi really wants to help deal with this, maybe she can lead the house democrats in support of ted cruz's emergency legislation which doubles the number of administrative law judges at the border, builds emergency housing to keep

families together, guarantees a hearing within 72 hours and then if the hearing goes against the people who are here illegally, we safely return them to their country of origin within two weeks. that's the solution to this problem. stuart: do you think the people of california know about -- do you think they penetrate beyond the emotion? because the emotion really is running high. and when you're dealing with children and the separation of families, you can understand how you can whip up that emotion. do you think that the people of california can pratt the emotion -- can separate the emotion from the issue and the solution? >> well, you know, emotional issues drive elections, and this election is five and a half months away. as i said, this is a very tragic circumstance. no one wants to see families separated. but the bigger problem here is we have not yet dealt with our immigration problem. when jimmy carter was president

and had democrat majorities in the senate and the house, they didn't solve the immigration problem. when barack obama was president anded had overwhelming majorities in the senate and the house, they did not deal with immigration in a comprehensive way. this is a tragedy, and it's a tragedy as a result of the fact that we have this huge welcome mat sign, and we encourage people to come here. in fact, california's democrats just added $10 million plus to the state budget to hire lawyers to help people who are here illegally stay here legally. s this is just a problem. it's going to get worse until we fix our immigration problem, and we have to fix it totally. stuart: well, if john cox, the republican candidate for governor, if he win, what will he do about this? >> well, if he wins, he'll actually be able to veto democrat are budgets. -- democrat budgets.

we have something in california that the president should have in washington, we have a line item veto. the california governor can go item by item and veto it out. ,st it's something we ought to have at the federal government. it's used to get rid of pork barrel projects in many cases. and john cox -- met me just make a prediction. on his worst day as governor of california, john cox will be better for our state than began newsome will be on his best day as governor. stuart: good line, sir. i think you practiced it. it's a good one, jim brulte. thank you very much for joining us, sir, we do appreciate it. >> thank you. stuart: i cut that a little short. i want to get back to the market because we have come back a little. we were down 400, then we were down 340, and ten we broadcast -- and then we broadcast some comments from peter navarro who is a trade representative, one of the trade negotiators. mr. navarro said, look, the chinese are going to get hurt

more in this recent tiff about trade than america, and he did say that president trump has a good working relationship with president xi, and they can work things out. ashley: i think that's the encouraging part. elizabeth: negotiations continue. stuart: negotiations continue. and look at this. when he said that, when we reported that, the dow was down 340 points. just a few minutes later it's down 250. so a rather unusual peter navarro, the hard-line guy, is actually helping the market come back a little bit. and that's what we've got now. show me the russell 2000, please. that is only down about a half percentage point. it's made a series of record highs recently. the theory being that these small companies in that index are less affected by the trade fight than are the bigger companies, and right now it's only down nine points. that's a half percentage point on the russell 2000. and now this. a new report says las vegas home prices are the most overvalued

in the whole country. sounds like a bubble, doesn't it? well, the property man who lives in vegas, bob massi, joins us after this. ♪ ♪ how do you win at business? stay at laquinta. where we're changing with contemporary make-overs. then, use the ultimate power handshake, the upper hander with a double palm grab. who has the upper hand now? start winning today. book now at lq.com.

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stuart: that a market keeps on coming b, and we've got this for you too. a report which says las vegas has the most overschooled, overpriced -- overvalued, overpriced real estate in the whole country. the property man himself, bob massi, joins us. >> yes, sir. stuart: okay. on what basis, what's the basis for saying this is overvalued? >> i mean, i think it's a little bit of overreaction, but i think if you drive around las vegas, you'll find out why people will say this place is out of control. years ago, stuart, in '05-'06, they used to say the state bird was the crane. well, they've arrived again. they're building everywhere. so i suspect that this report is saying, look how values have gone up. as you and i have talked, lack of inventory.

i think it's a little bit of an overreaction, but it has to be looked at. i'm not sure it's the best time to invest as it relates to housing. stuart: the medians price of an existing home on the market is $289,000, as i understand it, and that is up 16% i think this year. >> yes, sir. stuart: and in southern nevada in the first quarter of the year the overvaluation was 20-24%. you know, that sounding a little bit like bubble territory to me. >> i think, i mean, i think -- and i'm an optimist, not a pessimist -- but i think -- i'm sorry this thing rang through the damn phone. [laughter] tell 'em ill call 'em back. i apologize. [laughter] long story short, what we're faced with, stuart, is the lack of -- single family homes, let's say you paid $150,000 for that home. that home right now is selling

for $240-$250,000 because there's no inventory. of course, it depends what part of town you in, things of that nature. the town is exploding, the values are up, and that's whey we're seeing what we're seeing. stuart: are they buying at those inflated prices? is the demand and the purchasing there? >> the investors are. the investors are, for sure. you have people that are buying, obviously, families are buying, but they want to own again. so as a result of wanting to own again, they're buying. but the investors have just, i mean, they have just been like a stampede in this town. they're buying everything, and it's making it difficult for young families, and you and i have talked about families buying homes. so, yeah, that's affecting it. and, of course, rental prices are going up because there's not a lot of homes to buy because investors are buying it, guess what happens? the rental prices go up. we're in a tough spot. stuart: i'm going to be watching the property man here on the fox business network fridays at 8:30 because real estate bubbles

intrigue me, and rising prices are a good thing. bob, we'll see you again real soon. all right, more "varney" after this. ♪ . .

stuart: what a story on the market this morning. we opened with a loss of 400 points. we've come back to a minus 275. that is quite a comeback. if you look carefully on the screen, at 11:16 this morning, peter navarro, trade negotiator, a, the chinese have more to lose in this fight than we do and b, president trump has a good relationship with president xi and they can work things out with negotiation. when he said that at 11:16, that market started to come back.

we were down 340. within a second or two, we were down about 240. now we're down 270. what a day. my time is up but neil, it's yours. neil: thank you very much. we're on top of these developments. trade will dictate developments at corner of wall and broad here. these navarro comments whether they're market moving or not, they're all not that friendly. there is sentiment by a trade negotiator, he always es spoused that the administration will continue its resolve that hopefully cooler heads will prevail. we're still down 275 points. we've still got some premier issues, caterpillar and boeing and dupont and extending into the technology field with the likes of qualcomm, nvidia,