a senior mexican trade official. that official is telling reuters the u.s. is is showing quote, more flexibility on autos and on other issues. so just as we close out we've got a lot of news coming to you on trade. charles in for neil. i think you have more on trade. go, charles. charles: abs slautly. thank you very much, stuart. charles payne in for neil. the united states and mexico are getting close on an agreement on auto trade. we're expecting more clarity on from the white house the trump floating idea more than doubling tariffs on chinese good. blake burman at a very busy white house. blake. reporter: charles, we knew related to china there was the potential on the table for a fresh batch of tariffs, $200 billion at 10%. we're hearing the 10% number could jump up potentially to

2 1/2 fold, all the way up to 25%. sources are selling us not only some of the president's trop trade advisors pushing for, endorse idea of 25% tariff on $200 billion worth of goods at some point down the line but the president himself floated this idea. as spokesperson for the chinese responding with some tough talk in their own right. here was a spokesperson for the chinese foreign ministry saying, quote, u.s. pressure and blackmail won't have an effect. if the united states takes further escalation steps, china will inevitably take countermeasures and will resolutely protect our legitimate rights. china aimed retaliatory measures against the ag community in the u.s. the president last night in his campaign-style speech suggested that the farmers are okay with his long-term trade battle. >> i want to thank our farmers. our farmers are true patriots.

[cheering] because china and others have targeted china, and others, remember this, have targeted our farmers. not good. not nice. and you know what our farmers are saying? it's okay. we can take it. reporter: charles, back to the 200 billion potential at 25%, this really shouldn't surprise anyone when you look where we are now and what's happened over the last several months, because the steel tariffs enacted, 25%. the first batch of $50 billion tariffs, 34 billion gone into play, that is at 25%. you know how the president feels on tariffs. he likes them. charles? charles: thank you very much, blake. the question now of course is this a negotiation but does the white house actually risk pushing it too far? one of former treasury chief representative in beijing michael harrison. michael, i think one of the anxieties for people who are

backing president trump's efforts here and think that perhaps tariffs were the only, the only arrow in our quiver since everything else had been tried to no avail, is when do we accept victory? what does victory look like? ultimately we know china's xi has to somehow save face as well? >> i think that is right. that is really the part president trump hasn't spelled out yet. in other words he applied the pressure but the u.s. side has not been very clear about its ultimate demands here. we have a lot of different asks for the chinese. now before escalating furthering would be good time to clarify what we want. try to land at realistic place in beijing. charles: in your opinion, what would that realistic place look like? >> i think we have to address the two core issues president trump focused on obviously. one is the trade deficit. i think that is the easiest area to make progress and really the goal should be not specific commitments from china to buy

x-amounts of u.s. exports, but really structural measures, lowering tariffs. cutting out some non-tariff barriers china uses to restrict u.s. exports. i think that is fairly achievable. the really difficult conversation is over technology, what you would call china's industrial policies. that is tough because the innovation rivalry between the u.s. and china is becoming more intense and it is really becoming infused with national security issues. so that is going to be tough. i think what we need to do there, is really lay out some clear principles of what we want to see from china terms of how it funds its tech industry and its other innovative sectors. we need to be clear, not just give an impression that we're trying to contain china's rise as a technology power because frankly i don't think that is realistic. and in beijing, that kind of talk is leading the chinese officials to say, look, trump isn't really looking for a deal. he is is looking to derail china. i don't think that is productive over the long term.

charles: of course you get back to the boxer revolution and opium wars, china's history with the u.s. it plays well for the chinese economy apparently is starting to feel the pain. we learned overnight the export orders of 48.4 contraction. four months in sinking numbers. shanghai down 2% today. down 15% for the year. down 63% from june 1st. there is serious issues there. so there has got to be some sort of urge or need, even within china to sort of find a way to fix this. on the technology side, the idea that america won't derail made in china 2025 but certainly should no longer be done on the back of american ingenuity. they should not be allowed to openly steal american secrets and western company secrets with the joint ventures with a force of 51% ownership. that has to be on the table. >> that is absolutely right. this is the right fight to pick. i think most people even in the

trade community, folks who don't generally approve of tariffs would say okay, if we have to pick a fight this is the right one to pick but we have to do it in a way that sets out an approach that is realistic for china to follow. i think a lot of that involves being clear in terms of what principles we need china to follow. and also, really importantly, working with allies. that is a really critical missing piece here. president trump by threatening tariffs against the eu, against japan, against canada, he is making it more difficult for allies, many of whom have the same concerns, to work with us productively. that is really a critical piece. charles: maybe that will be a moot point after what we heard with the eu. we'll see. honestly, to be quite frank, michael, i don't like the idea of going into battle with france. i don't think they have the will power, the guts or the economy to stand toe-to-toe with america to push against china as china pours money into europe and

other nations through the silk road initiative. look at iran, they don't want to scotch the iranian nuke deal because of economic issues. i'm leery about that. i hear most experts say that would be a easier way to do it. where do you see us going from here? this morning in america, american manufacturing pmi number. the two issues are concerned about, the labor issue which is crisis is and more talk about the tariff issue? >> clearly the tariffs will have an impact. the issue they will probably have an impact with some lag. the u.s. economy is very strong right now. so businesses will start to feel the pain as we get to the next round of 200 billion, consumers will start to feel the pain as bell. right now president trump seems to feel very confident about the strategy. doesn't seem worried about how this could impact u.s. midterm elections. so i think for the time-being, that the signs would point to us going ahead with further escalation but i think it is

closer to 2019 when the real i am, economic impacts are felt, the market impacts that we're more likely to see the white house say okay, where do we go from here, what is the landing zone? charles: another take, maybe it might help with the midterms. i think a lot of trump voters think he is is coming from the right place. some are willing to endure some pain. we'll see. a lot of this is brand new. we haven't been down this territory before. thank you very much. appreciate your expertise. >> thank you. charles: trade issue with china not stopping apple from posting record revenues. the market cap creeping near that one trillion dollar mark. susan li is here to break down apple's record day. >> ever closer, right. i will get to the u.s.-china trade spat, what tim cook had to say. apple proved to us why it is the most valuable company on the planet. strongest rate of growth in 11 quarters. blowing away expectations on profit, revenue, guidance. solidifying transition story

apple is no longer hardware iphone maker. services, that is the money we pay for apple pay, apple music, itunes, icloud, so much more, making more money than anticipated last quarter, also ahead of schedule in reaching tim cook's goal doubling to $14 billion in revenue each and every quarter. we're on the earnings call throwing out ridiculous numbers like 300 million paid subscribers on the app stores, music and tv. tv, music revenue jumping 50% in the quarter. that is setting them up for a fantastic next quarter as well, usually the the eye get quarter third quarter. coupled with the 100 billion-dollar share repurchase, higher dividend, a strong business with a lot of cash back for shareholders. that's why, yes, we're pushing ever closer to the one trillion dollar mark. charles, i want to tell you what i was listening to on the

earnings call last night. it was all about u.s.-china trade, how is apple being impacted. that is what the investment community wanted to hear. tim cook said so far after three round they haven't been affected. we'll look at the supply chain that is very complex that includes data purchases and data centers and purchases in the future the he said ultimately the trade tariffs shows up as a tax on the consumer. the consumer ultimately gets hurt and winds up in lower economic growth, hopes, he thinks, that cooler heads will prevail. charles: we'll see. i clarify when people say that, tax on imported goods consumers buy. points to a greater issue, why aren't we making things in the first place? it could be a moot point for our neighbors that don't have a job, will have a job. we'll see. >> if you're apple, worth a trillion dollars, you have 60 billion in revenue every quarter, that is dependent on cheap labor, lower costs, handsets sewed. charles: that is good for apple.

apple is not america. >> i will take note of that. charles: certainly, seven million americans that lost their manufacturing jobs in the last few decades. want to go to market watcher lindsey bell, if apple can save the tech wreck. nasdaq 100, to me one of the better indicators, proxies for the tech names was right above the 50 day moving average going into yesterday. it held. it apple a name that saves technology, makes sure investors stay pretty confident in the sector? >> seems to be the case, right? it happens to be the largest, last of the fang names reporting earnings, as susan covered the numbers were outstanding. the switch to services is really important because as this company, as installed base with the iphones starts to you know, flatten out, services will be really the big area of growth. you know what? service is comes with a bigger margin. so that's really important. charles: you know what is remarkable that tim cook, he

weathered the storm, listen, following someone, following steve jobs, as i always say akin to following muhammad ali, when you follow a legend you will have a lot of heat anyway and people will doubt you. i think he weathered the storm, put his mark on the business but a lot of people are critical of the notion buying this much stock instead of investing or making acquisition that could make them a bigger cloud player. are you okay with the strategy? hard to argue a trillion dollar company that is successful. >> they are actually spending money. they're building a new headquarters and they are investing in their business. a lot of these, that was a theme i took out of the tech sector reporting, cap-ex is increasing because they have to invest in data centers and servers and infrastructure to really support the growth they're seeing within their own businesses, within the digital economy we're moving towards. so, buybacks are huge, $20 billion bought back in this first quarter.

they have 100 billion buyback in place. we think they will probably buy back 10% of their shares. they bought back 26% over the last three years. we expect them to buy back another 25% over next three years. if you're warren buffett you probably like that, your ownership of the company will increase above over 5%. charles: so we've got these other names, facebooks that took it pretty hard, netflix took it pretty hard. a lot of folks are saying as the dust settles sift through the ashes. there were always buys on dips. where we see they are all won't be lumped together and won't be considered one big acronym. at this point do you go with apple, even though people saying all-time high with lowest traditional valuation metrics and go with other names gotten whacked but still pretty expensive? >> we like apple right here because it is trading 14 types

on forward p-e basis. that is better than the 19 times you're seeing for the tech sector overall. i agree with you, some of these, especially social media companies, they got hit hard as users are declining, outlook for user growth is also declining, so i think they have a little bit more of an issue with regulation on them, as well as consumers trying to figure out where they want to be in the social media space. i think consumers are trying to get away with platforms want to be everything to everyone like facebook and move more toward to tailored operations like instagram or snapchat where they're reporting earnings on august 7th. we'll see where they go. i think you need to let those numbers come out, let the dust settle within the social media space, it could definitely be a buying opportunity. i don't think people will stop using social media overall. charles: they won't. >> a better, safer play is facebook. we like google too.

charles: use social media but what's the hot platform does change from time to time. there will come a time flashing money on the gram won't be the coolest thing out there. lindsey, thank you very much. appreciate it. president trump threatening a shutdown. we're getting new details when the wall might actually be built. that's next. make sure you watch my show tonight. a lot to go through. the market is all over the place, still near all-time highs. 6:00 p.m., eastern time, "making money." we're on the top stories. ♪ my father passed this truck down to me,

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>> we're going to have tremendous border security that will include the wall, that will include the wall. [cheering] we have $1.6 billion and we have started large portions of the wall but we'll even the way we negotiate we'll need more, we're going to get more and we may have to do some pretty drastic things but we're going to get it. [cheering] charles: president trump of course hinting at a possible government shutdown over border wall funding, despite warning from many top leaders in the republican party. want to go to california republican congressman dana rohrabacher. thanks for joining us. president trump pointed out where there are parts of a wall

or security measures have been placed, for instance, san diego, it has been actually wonderful. we know that the economies on both sides of that fixture, tee tee -- tijuana, san diego, done well. it is point of entry for drugs, fentanyl made in china. the worst crisis going on in this country. why are so many top republicans faced to make an issue or hand it to democrats? >> we have significant number of republicans who believe in open borders because they believe in a global marketplace and it is, they call themselves free traders and i have always considered myself a free trader but over and above that, should be a consideration of what policies will best serve the people of the united states in this situation that we're in right now and open borders will not do it.

and having a global economy based on these massive, multilateral trade agreements which we can't enforce, this is not in interest of the people of the united states and especially controlling our borders is in interests of people of united states. charles: to be quite frank, trillions of dollars of net worth tied into the status quo which includes open borders, antiquated trade agreements, including world trade organization goes back to the fatt. talking talk -- the gatt. this scares a lot of people. voters out there -- >> they voted for trump to shake things up and to watch out for their interests. here we have the democratic party, they're talking about eliminating i.c.e. eliminating our ability to

actually -- that is the group that actually enforces our border and takes, makes sure people who come here illegally, we're able to get control of that situation, would eliminate that. their past here in california, think of all the sanctuary state, where they prohibit our local law enforcement from cooperating with federal authorities even with illegal alien criminals, people that have broken our law. this is, i do not understand, why the american people do not fully appreciate, democrats and republicans, they're being betrayed by the democratic party. they're having money that should be going to our veterans and health care and education, should be going to our own people, our own seniors, they're bringing in millions of people. now they are even talking about letting them vote. charles: my answer to that is, anyone thats has a lock on their front door at their house consider maybe we should have a

lock on our door. not that it doesn't swing open, but we decide when we open it. real quick there is new narrative out there, that president trump simply doesn't care if the gop loses in the midterm elections. this gets back to the experts not understanding his political calculus is in the that standard political calculus we've already seen before. >> if he is confronted with people that want to cooperate with him and trying to get something done, he wants to get something done. if he is, you know, confronted with people saying, why he can't get something done, reagan used to say this, the experts are the people who have every reason in the world why something can't be done. the bottom line is, trump wants to get things done, when you have some republican leaders, i think a lot of us dealt with the fact that they philosophically differences with president, say they can't do things, they can, if they have the will power to do it. charles: congressman, that is the key, the will power.

appreciate it. thank you. private employers hiring more than expected, the good news train keeps rolling along. our economy is absolutely on fire? what does that mean for the fed? they are meeting, they will make announcement. we'll break it all down for you after this.

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charles: positive economic signals keep rolling in, private sector jobs, adding 219,000 during month of july according to adp. workers getting pay increase, with workers' compensation in nearly a decade, consumer confidence remains elevated. could the fed decision at 2:00 p.m. rattle the booming economy? i want to go to fox news contributor scott martin and our own deirdre bolton. deirdre, the conventional wisdom is the fed probably stands pat but everyone will be watching closely that language. >> they sure are, charles but on

that comments are pretty much divided. you called it. it is all about the language, we may hear the stance of monetary policy for now, a lot of people focused on that for now, will they appear, not appear, sustainability of economic growth, that will be another key phrase that people will be listening to, in addition to some language that talks about potential fallout from trade tensions, that is really today's focus, spinning ahead, you just talked about the gauge growth component to our economy, i think on friday as part of the jobs report if we see hot wage growth number, then we get all sorts of calculations. putting cart before the horse. we're just talk about today, charles. charles: what do you think is hot? 2.9, 3.0 be hot? that number derailed the market back in february? >> you are reading my mind, charles payne. that is exactly what i'm thinking. that is exactly the level we saw increase in volatility right.

that is okay. the fed can not ignore that. that set us off on a little bit after rockier course, i think the hot number would be exactly as we just referenced, in february. send investors for a little tailspin for a few days. charles: scott, interesting, having jay powell really a wall street guy, not a classically trained economy. i thought the humphrey hawkins testimony, seemed to me was saying to investors, in fact everyone, that i won't derail the economy, i won't derail the stock market but we'll be hiking rates. in other words i do it in a way that doesn't kill this thing. am i reading too deep into that? >> no, i think that is a great read. would i go further, say, hey, ladies and gentlemen, i could be a dove in hawk's clothing. i really think that is the key. you brought up a great point, how wage growth number derailed the market a couple weeks. that was new jay powell.

we were getting used to this new fed and to your point, charles, a lot of commentary as we gotten to know mr. powell over the last few months, i am going to continue to interest rate hiking cycle, if the economy falters, if trade wars heat up, maybe if the market gets volatile again, we'll put back some of the hiking. market is lot more comfortable and confident, what jay powell is going to do, good jobs number, good wage number we'll get, 3% will not knock the s&p down. charles: you know, deirdre, i looked at manufacturing data this morning, pmi report, the worries were 50/50. tariffs and skilled labor but could there be a odd, ironic rather, on tariffs if the fed holds off because of tariffs concerns because of raising rates? >> i do think that is a possibility. it is too soon to tell, right?

headlines speaking with blake burman from d.c., possibility of more tariffs. it's a little bit too soon to factor into the equation. scott gave me my best idea for halloween, be a dove. charles: that is lot of layers. >> it is perfect for me. charles: scott, we were up earlier today. starting to get many soffit back. we've come far from the april owes lows. operating margins are amazing. guidance is better than normal. why can't the rally sustain itself? >> there is a lot of seasonality going on, charles. there is obviously geopolitical uncertainty to say the least. it is one of those period where the market needs to take a breather. as you see opportunities out

there in the marketplace, when things react badly to earnings, say like netflix, for example, baidu is another one we're looking to pick up this afternoon, you need to pick your spots. it will not be easy for individual investors as it was last couple years you buy most stuff it will go up. i believe as the market takes a breather, a digestive pill, it will be eventually higher prices for all, you need to take the opportunities to take your cash and buy. charles: wild moves in the earnings, tell people the winners and losers. market is picking them for you if you have any cash. deirdre, scott, thank you both very much. >> thanks. charles: the senate tackling election meddling on social media as facebook is trying to crack down. we have new revelations for you straight ahead. ♪ ♪

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charles: senate intel committee holding a hearing on election meddling of social media platforms. >> they rejected a call by the democrats adding $250 million money towards election systems, to make sure they won't be hacked. there was interesting conversation between the senate and panel of experts social media and digital experts, asking how hackers are getting in, how to protect the u.s. economy. a few highlights of conversation between the experts and senators. how the united states may not be prepared to fight against these foreign actors who infiltrate facebook and twitter and, indirectly influencing american population. there was a one comment saying that an assault on the democratic process is much bigger than an attack on one single election because it is interfering with the entire democratic process. it brought up facebook quite a

bit, more than 60% of the population using a platform. consolidated. constantly go on it, in 2016 it was confirmed, u.s. meddling or meddling in the elections by russians. one comment came up from senator marco rubio from florida. he talked about he said you can't blame all the social media platforms. you can't just blame them. listen in. >> it would be blake blaming road builders because enemy used the road they built to put your tanks into your country. so there are things these folks can be doing to improve the way they operate no doubt about it, ultimately we should focus what is being done and not only who they are using to do it. >> they all agree there is a problem right now. you have foreign actors meddling in the democratic process. they are removing 32 accounts from facebook and instagram because they found bad actors

created facebook pages and created events. facebook can't confirm it is russia. but you have russian finger points all over it because there connections with the russian ira, the internet research agency. what is russia is doing, i find this so interesting, they're funding, putting together the events to go against one political spectrum and unite white sue prep sift and create protests against unite the right. they are literally trying to divide the population. a hear is important to combat foreign meddlers or bad actors. charles: thank you. how should washington respond? i want to go to former ohio state secretary of state ken blackwell. you served on president trump's election integrity committee. some people call them meddling. some call them an attack. there was an effort to disrupt, an elections process to stir up

trouble in america highlighting to kristina's point the fissures we already have in this society, to just, quote, unquote, lack of a better term, mess us up? >> oh, absolutely charms. look, not, ever since roosevelt sat across the table from stalin, we have known that you have to keep the russians and other foreign adversaries in front of us. so we shouldn't be surprised there is this attempt to disrupt our democratic process to sow seeds of dissension and division. these guys are masters whether iran or china, or russia, those folks who have capabilities of manipulating our cyber network are going to do it. it is part of their nature. and so we have to be very, very -- only defensive but take

the offense making sure we are taking steps and doing the things necessary to protect the integrity of our elections and our democratic process. charles: what exactly would those, would those things be in your mind? because we look at, for instance, some of the techniques used for old school, going back to two or three decade old phishing schemes that worked pretty well. people's password is password and open up these phony-looking emails. they still open up and share information? how does the government plug all of those holes? >> well, look, first, we can't think that the government is going to be able to do it by themselves. you know, i applaud facebook for shining a light on these curious activities by foreign actors. there is a old biblical saying, john 3, those who would do evil

love the darkness. so transparency and shining lights on these activities are going to be very, very important. also requires us to be smart citizens. you know, we just can't eat the soup that is served up to us. we have to in fact inspect it. that is very important we don't surrender our individual responsibility to be thoughtful about what, and discerning in what we in fact political decisions on. look at the end of the day we have bad actors internal and external. we just have to be vigilant and smart. one of the steps that we need to do from a national security standpoint is to make sure that we clean up our voter rolls. once we have faulty and bloated

voter rolls, that are not there, that is a problem. charles: i want to transition. i want to let you clarify what that means. some will say that euphemism for blocking people from voting like i.d. and other things. when you say clean up the rolls, what does that mean? >> well, look, we in fact have rules and regulations. there is no reason for to you be registered to vote in ohio if three years ago two elections ago, you moved to wyoming. the fact of the matter is, we have, we need to have a process that allows us to clean up our rolls. that requires intrastate cooperation. charles: right. >> that's what we don't have enough of. charles: get your thoughts on president trump calling on jeff sessions to end the mueller probe. what do you think? >> well, look, i think that this whole notion of russia collusion is a distraction. takes us away from what we

should be talking about. that is our economy moving again. that is, you know, the pay increase that workers are taking home. the fact that folks who get their hands dirty are billing our infrastructure and our homes again. $3 trillion focusing on coming back to this country. growing our economy, not a false narrative of russia collusion and president's participation. charles: there is no collusion and at this point why not let it run its course? >> well, if it is going to run its course that means that it will go past the election. and that in itself can be a distraction. charles: can you imagine how explosive it would be if they ended it right now before the

midterm elections? >> well, i, it is how he ends it. if in fact he says, look, this is how long we're working. we don't have any evidence of collusion, it's over, then it is over. if in fact he has not exhausted every rock and crack in the cement, then he needs to continue and we need to just let it ride its course. charles: they every rock, crack, real, imaginary thus far. >> absolutely, charles. i agree. charles: but i don't know. i honestly think politically that could be a real tough one. i got to let you go in 30 seconds. quickly the journal put out an article suggesting that the president trump wants the republicans to lose the house in the midterm elections. i find that to be ludicrous, but what do you think? >> i would agree with you, charles. the fact of the matter as republicans lose the house, they will impeach the president and it in fact will stop the forward

progress of our economy. americans like the fact they're back to work again, that we in fact are, defending our borders like any other rational country. that we are a countriedthe most diverse and most prosperous in all of human history and we want to maintain that status. charles: ken blackwell, thanks for being with us as us. >> good to be with you, charles. charles: deadly california wildfires continue to scorch acres and tons of property. we'll have latest on the fires next.

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charles: more news on the les moonves misconduct probe, more documents revealed los angeles prosecutors declined to pursue charges against the cbs chairman back in february. fox business's charlie gasparino is on the story. >> i don't think that will be on the earnings call tomorrow. the charges were, sexual misconduct, i can't remember the exact nature of it. and it was, these were decades-old charges. from what i understand the statute of limitations ran out, first reported last night by nbc news. the story now turns to the earnings call. whether les moonves will appear

on the call. this could change literally the last minute. they may decide to pull him, if something else breaks, some other allegation pops up or whatever. what we do know right now, barring a last minute change, cbs ceo les moonves plans to be on the second-quarter earnings call on thursday. additional developments could prompt him to skip the call. as i said. but as of now, he is prepping to answer, i'm sorry about that, i thought i shut this thing off. he is planning, he is prepping to answer analyst questions on the call tomorrow. here is where it gets interesting, it is unclear how he will address the stuff when it comes up. you would think on an earnings call analyst was ask about profits, losses new programing. charles: sure. >> the problem that i think he has is that the allegations as laid out in the, in the new yorker article now has an impact on the stock. when something, as you know the stock has been down --

charles: to our point, let the audience know, 52 high, $57.67, $67.57. look where it is now. it is down significantly from its highest point in the last year. >> down today again. that is three days down since the story broke. it was actually going down as rumors about the story was breaking. there was a spike yesterday when we -- i don't own the stock by the way. there was a spike yesterday it reported he was likely or planning to be on the call. i think the market sees anytime you put him out there, it is more business as usual. it is generally better for the stock. we'll see what happens tomorrow. again, you know, if, my guess is they're prepping for everything, okay? i understood they were prepping him for a question that may come up. i'm not sure how much he will get into it. i don't know how much he can talk about it. charles: my theory he will make a statement before opening up

for questions. >> right. the question is, is he going to appear on the call? just so you know, my reporting says he is planning. my reporting says you never know what could happen tomorrow. charles: sure. >> if he is still ceo and chairman, he almost has to be on the call, correct? charles: plus there are a lot issues around this country that were around before this whole thing broke. >> shari redstone business. trying to wrest control from national amusement from shari redstone. he wants to sell it to somebody else, not be connected to viacom, the other media outlet. you're right. he was leading charge on that. they're still doing that they're still looking to break away from shari redstone. he has to answer the questions. charles, i don't think you can delineate between "the new yorker" allegations and earnings, shari redstone, viacom , because "the new yorker"

story had a impact on the stock, continues to do so. part of what analysts will be asking about. charles: charlie, thanks a lot. appreciate it. coming up is the strong u.s. economy, this data we're having, does this actually give us a boost with respect to the battle we're going through, the trade battle with china. we'll discuss that next. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. fidelity. with tripadvisor, finding your perfect hotel at the lowest price... is as easy as dates, deals, done! simply enter your destination and dates... and see all the hotels for your stay! tripadvisor searches over 200 booking sites... to show you the lowest prices...

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charles: welcome back to "cavuto coast to coast," i'm charles payne in for neil cavuto. right now we're moments away from the white house briefing with sarah sanders. we'll be monitoring that particularly to see what is said about trade threats against china. meanwhile, the trump administration raising the stakes, now a report out there considering a 25% tariff on $200 billion in chinese goods. this as we're seeing signs that china's economy is starting to slow down a lot with what we've had so far in this trade skirmish. let's go to market watcher john layfield. john, i know you're a traditionalist and you don't like tariffs, but as a weapon, as a tool, do you think maybe they're starting to work? is we got great news an houring ago from mexico that we could have some kind of deal particularly in autos, we have a deal with the e.u. in the works, at least an agreement, and maybe china will come to the table? >> yeah, charles, i am against

these tariffs. i am against potential trade wars, but it does look like it's starting to work. china was already starting to slow down. they are a manufactured economy, they're not a free economy, and a lot of that growth, that 6.5% gdp growth has come through debt financing of their economy, and that has come home to roost. that was slightly before these tariffs started happening to china. now you add a very strong economy in the u.s., a weakening economy in china, if you're going to do these tariffs right now, right now it's very much to the usa's advantage. charles: just to follow up on what you're saying, reports that their debt to gdp will soon be 350%. they spent a trillion dollars just propping up their currency, so the notion they'll let it go into freefall seems farfetched even though that's a potential tool. and we know the shanghai composite now 15% this year down, but what people don't realize, down 63% from june 1, 2015. so there are some serious issues going on there. how would a deal look in your

mind that would allow president, and i who's essentially an emperor to save face and by the same token get this resolved? >> the key part of that, charles, is saving face. it's very big. when president trump sent over his delegation to china and the papers all that morning were stand up to the bully, the united states. there's a lot of political pressure for the chairman to not give in to president trump or at least beer -- at least the perception. he already allowed bsaf, 100% owned, i think that's one of the things he can go forward. getting this intellectual theft of property, this is a terrible thing that china does. this is going to be hard to fix. however, dealing with some of these companies that go into china and have free rein to do business there, i think that's one of the ways chairman xi can give something to get out of this trade war. charles: i agree 100 better.

last night apple released earnings. 41.3 million iphones, other than that, golly. they're just a couple of points away from being $1 trillion market cap. what do you make of it all? >> i think it's insane that you've got these huge companies -- amazon, netflix, google, facebook -- between 500 billion and almost a trillion dollars, and they're growing at over 20%. that is just incredible. that's insane that companies that big are doing this. i think apple is doing everything right. i think the biggest thing is with services, i think apple going forward is going to make most of its money in services. they've got their hardware out there, i think facebook is the same. charles: so facebook, you think it makes a rebound from here? >> i do. i think it's already at numbers of scale. i don't know how people thought it was going to -- [laughter] charles: you mean they can't get more than 2.3 billion people? >> they've already got everybody, everybody that's got any money, charles. [laughter] look, half of the world's in

poverty, so you've got about 3.5 billion people making less than $2.50 a day, everybody in the world basically right now. they don't have to grow anymore as far as subscribers, as far as users. if they just find a way to monetize that, they'll be great. this is the biggest audience in the list riff of the world -- history of the world. charles: they do have to find something, the next great thing after instagram, and that could be pretty tough. >> it certainly can be, and the regulatory pressure coming out of europe, they're having less data that they're able to sell these ads, 18% of digital ad sales globally compared to google at 31%. it's going to be hard to grow without that data because of privacy concerns coming out of this european regulation. charles: john, thanks a lot. by the way, they found water on mars, so, you know what? where there's water, there's life. where there's life, there's facebook. >> hey, if they find beer,

charles, i'm going. [laughter] charles: that's going to be a heck of a link-up, but we'll do it anyway. see you later. hey, the economic momentum continuing because, i've got to tell you, the numbers look phenomenal. private sector adding more jobs than expected in this morning's report. want to go to adam shapiro at the new york stock exchange. >> reporter: hey, charles. the big news is going to be friday when we get the employment numbers, but adp actually having a beat here. you know, the street was expecting we would have roughly 185,000 jobs added, but it actually came in, according to adp, at 219,000 jobs for the last month. so that would be a gain that was better than analysts were expecting. big gains in businesses that have between 50 and 499 employees and then, of course, the biggest number as far as sector was service sector, 177,000 gains. one thing that you hear people in the labor department lock up complain about is that the adp

number so often does not mimic what we get in the labor department, but it's expected the number will be good on friday when we get the official unemployment report. also when you take into consideration gdp is 4.1%, that's pushing wages up. that's a big number we're going to be looking at, pressure on employers to offer more money. and we see that happening. the last report it was year-over-year a growth of 2.7%. so we'll want to watch that number. ten-year treasury, by the way, just to keep an eye on all of this, just below -- well, it just hit 3%, the yield a few minutes ago was 2.99, but we're now at 3%. you can see what this is going as far as investors feeling more secure about other forms of investment. the dow is off 62 points, s&p off 1 point. and finally, as you take a look at the markets, you know, what's interesting, charles, we were in positive territory the first two or hours, and then we sold off and now down, again, 63 points. back to you.

charles: yeah. it looks like the market's looking for that next catalyst, maybe getting to this friday's job report might be key. >> you said water on mars, when they find beer on mars. charles: so you and layfield, we've got two people up there already. talk to you again soon. well, the economy, of course, is rolling, and this ahead of the jobs report. but the question is why isn't the media really covering any of this? i want to go to pricewaterhousecoopers partner mitch rochelle, fox news contributor, jessica tarlov and deneen borelli. i've got to tell you, mitch, it's frustrating because i understand, listen, the mainstream media does not like president trump. but this is really about american success. you know, yesterday when that number came out that showed employee compensation rising at the fastest pace in ten years, if you looked through the numbers, it was even better for miners, for construction workers. i mean, these are hard-hit americans for a long time. we should celebrate that. >> totally. and what's interesting is the

numbers we talk about on the air here all the time are the numbers that the market cares about, the things that regular, average americans care about they're feeling too. wages are going up, after-tax take-home pay is going up. on the other side of it, because of tariffs and diapers are going up in price, oil's going up in price, but generally they feel good, and you see that in consumer confidence and spending. those numbers were very strong recently. i think main street is optimistic. charles: there's no doubt main street is optimistic. jessica, i've got to tell you immediately after the election we saw all these confidence surveys rocketed up whether it was small business, nfib, the national association of home builders, they put out a confidence report, and there was one line that really blew me away, and it's prospective foot traffic of potential buyers. for 11 years it contracted. december 2016 it finally went into expansion. so people, i think, some of the things they were hoping for are coming to fruition. and we just don't hear about it

outside of maybe, you know, the business show and things like that. >> i would say that you actually do hear about it, but you hear the negative side. i've seen clips of coverage on cnn and msnbc, for instance, where they're talking about the 4.1% gdp number and then it's followed by obama got that four times, and we once hit by .2%. no one can deny the consumer confidence p, the spending up or that president trump is now rated at 55% in terms of his handling of the economy. so that discussion is happening, and i think that candidates from both parties who are running more localized elections -- which is what they should be doing -- are taking note of this. if you look at elections across the middle of the country, specifically in the rust belt, you don't hear the railing on trump that you used to, you don't hear every bad thing about the trade war. there is a discussion with people who do work many coal mines or are manufacturers. it might just have more of a negative spin than if it was --

charles: it's still crazy that you would put a negative spin on 4.1% gdp. let me give you guys a stat from this morning's adp number. in the last 19 months, america's added 836,000 manufacturing job. the prior 19 months, 26,000. this is a hell of a story. this should be the number one story in the country. again, i'm sure if you're campaigning as a candidate in the heartland -- >> you can't campaign against that very effectively. charles: you know, so when it's always about seeking out the bad and the good, that underscores the point, i guess. >> well, you mentioned it, the fact that the media is so against this president, and it's all resist president trump as well. i'm a marketing major. you can have a great product, a great service. if you don't advertise it, it doesn't matter. the president is always in sale mode just like he was in tampa last night with the rally talking about how great the economy is. people are back to work, low

unemployment. and with those who are up for re-election, republicans, they don't do a good enough job in talking about how great our economy is, how job growth is, how wages are going up. they need to do what the president is doing, get into sale mold because the media is not going to do it. charles: glen gary, glen process -- >> always be closing. [laughter] charles: first prize, $10,000. no, the cadillac. >> second prize, steak knives. charles: third prize, you're fired. [laughter] so what does -- because there are mixed reports out there, what the republicans are running on. and surprisingly, according to the articles i've read so far, not enough of them are following the name -- deneen or jessica's advice, not talking about the economy as much as they should. >> they're the ones who voted for tax reform. it certainly helped in its catalytics to the growth of the economy and certainly is, all

evidence suggests that. they should be running on we're the ones who voted for it, and this is what's benefiting you. that seems pretty simple to you. >> the other thing -- i'm sorry to cut you off -- is the fact that democrats did not support the tax cuts. and if they take control of the house, they want to take away your money, take away that hard-earned money that you have earned for you and your family, those bonuses, those higher wages. that's another message that needs to get out. >> i definitely think -- if i was a republican strategist, which i am definitely not -- [laughter] i would say, yes, that's a smart thing to be saying. democrats can also point to the fact that this administration is mulling a huge capital gains cut, it really is the 1% that's making more, that are our corporate tax rate could go up a little bit, not necessarily to 35 -- charles: it would not go up under president trump -- >> no, that's what they could argue. we want to put even more money back in the pockets of the individuals. so i agree with you there. in terms of republicans being able to talk about the economy, unfortunately for them there's a lot of noise coming out of the

administration that then distracts from being able to focus on that. so when they have to answer questions about helsinki, for instance, when they have to talk about national anthem protests -- charles: although i don't think the average person in iowa right now is asking about helsinki. what does that pew poll have russia down at 1% -- >> oh, it's a top issue, it's never going to be that. i'm just saying when congress people get in front of a camera, most likely the interviewer's going to be asking them about the president's latest crazy tweet many instead of saying how's that tax cut working out -- charles: or they won't say according to adp 836,000 americans are been. >> who wants to talk about that, charles? charles: what does the shutdown threat mean for the border wall? of course, catch all that and more including tesla's earnings result tonight on my show, "making money," 6 p.m. eastern right here on fox business. ♪

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flames of over a dozen fires. i, moments ago, went to the fire line of the biggest of these 16 fires to get a look at what fire crews are biel -- are dealing with. what you see burning behind me is the carr fire. it is now the sixth most destructive fire in california's history. it's only 35% contained. it all started by a car breaking down on the side of the road, engine failure setting off sparks and igniting what is being called a monster. it is so erratic and volatile, firefighters are having a hard time beating back the flames. it's already killed six people including two firefighters. et has wiped out -- it has wiped out entire neighborhoods and whipped up a fire tornado that terrorized the community of redding. and, charles, you see at the end of that the smoke hitting me in the face, that wind changing directions quickly is exactly what is making this fire so

difficult to predict as these fire crews are digging lines trying to predict where it's going to go next and stop it before it gets there. this has also been a very expensive fire, but cal fire, a pio with cal fire says that these issues are something they've never encountered in wildfire history. >> last few years the fire behavior's been changing dramatically through the state of california with the drought and stuff like that. the fire, you know, produces its own weather, and, you know, we used to be able to protect homes just a few years ago might not be adequate today because of, you know, just the conditions that we're facing these days. >> reporter: so far $119 million spent in just fighting these fires, that's not how much damage these fires have cost communities as structures have been completely destroyed. that's about a quarter of the entire budget that these fire

crews have for the entire year, and we are only one month into the fire season. charles? charles: wow. thank you very much, hillary. gop leadership continues to dismiss president trump's threats of shutting down the government over border wall funding. to former romney campaign policy director lonnie chen and "usa today" congressional reporter eliza collins on whether the wall will ever be taken up. eliza, let me start with you. you know, yesterday president trump put out a tweet approximately at this time reiterating the fact that he is not intimidated or afraid of making, shutting down this government before the midterm elections. and that's sort of a rebuff against reports that he had put it on the back burner at the request of kelly and others. so why the disconnect between what we keep hearing from president trump and gop leadership? >> well, the president's base is demanding the wall. they're demanding he fight on this issue.

trump is very loyal to his base. he feels like they put him in the white house, and he feels like he owes it to them to fight on this. the problem is, it is not helpful for republicans who are trying to keep their seats particularly in the house where there's a real chance democrats can take control in november. i had, was one of those people reporting that meeting last week. trump are, connell, ryan sat down, mcconnell and ryan basically laid it all out and was like we can fight on this wall, but after the midterm elections. they left thinking the president was okay with that. obviously, he's changed his tune in recent days. really trump is loyal to the base, and the rest of the gop is trying to thread the needle between the base and also those more centrist republicans and independents who might not be as excited about a government funding site right before the election. charles: you can see why folks who voted for president trump would be skeptical when mitch mcconnell says, hey, let's address it later. later never seems to come in washington, d.c. >> well, this is the problem, i

think. and particularly with respect to the wall, it seems like it should be something that's fairly easy get for republicans. you know, my premonition on this was always they would do a short-term funding bill and kick this out to the end of the year, and the real fight would be after the midterm elections. i think strategically that probably is a smarter thing to do for republicans. but to your point, charles, i think the president's losing patience, and this is a signature issue for him. if he cannot deliver on this issue, it's going to be a big problem for him and, frankly, republicans going forward. charles: what, lonnie, what do you think the ultimate package would look like? many say, ultimately, if you want dems onboard, it has to involve daca. president trump put out an olive branch, in my opinion, with the daca solution that was rejected out of hand with the democratic leadership. >> i think you're right. i think the president's offer on daca was generous. i think some kind of exchange straight up, one for one, is the best and cleanest deal that both

sides can hope for. and frankly, charles, i think it takes this issue off the table, benefits both republicans and democrats, and people live to fight again. the bigger issues around visa structure, moving away from a system that's diversity based so one that's more merit based, these are really tough questions. there are divisions even within the republican party. let's do a clean deal, get daca and the wall off the table. charles: eliza, what are you hearing or sensing might be the right combination of compromise to get enough democrats onboard along with republicans? >> well, lanhee's exactly right, it's that clean wall money for daca that could pass, i believe, both the house and the senate if it was brought up. but the republicans, the further-right republicans and the president are asking for more than that, and those are no-gos for democrats right now. so the vista lottery, he's asking -- visa lottery, he's asking for an end, they're asking for e-verify, a whole bunch of immigration reform this

is that the president would like to see along with the further right in his party. and those democrats will not budge on those issues. so the larger the package gets, the more likely you'll lose the democrats or if you move to the left, you're going to lose republicans. charles: certainly a delicate balancing act. thank you both very much. tesla burning through cash at an alarming rate. in fact, many think that the company is in danger of burning out. what investors are looking for when the company reports its earnings, next. ♪ ♪ you're turning onto the street

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after the company reported higher subscription prices. it was absurd what they were offering, it was too good to be true. we'll see if this is enough to stop the company from continuing on this downward path. meanwhile, tesla down, this ahead of their earnings report after the bell. investors, well, they're very concerned. there's the cash burn, there's the erratic behavior of elon musk. want to go now to market watcher or craig smith on what we should be expecting. craig, you know, this is one of those stocks, and i say it's really unique. this stock is and netflix where you have two guys who are extraordinarily hype men, they've done extraordinary things, but they tend to overpromise and occasionally underdeliver. and more recently in the case of elon musk, become more erratic along the way. so what are we looking for? i would suspect it's going to be a lively conferences call and lively action in the stock as well. >> yeah, charles. i mean, it's the unpredictable nature of elon musk everybody's looking at right now. i don't think you going to see any big surprises as it relates

to production of the model 3 or s or x class or any of the power walls that they're making in their energy unit. i do, however, believe that elon musk has a lot of explaining to do, how he turned in six consecutive quarters of negative cash flow. he's burning a billion dollars a quarter. he's got $10 billion worth of debt, and the numbers that i've looked at, charles, he's going to have to raise cash in the first quarter of 2019 unless he makes his company profitable. so he may make a great car, make great space rockets, a great hyperloop, he's surely not good at making a profit. charles: and to that point, being able to articulate this, this is one of the areas where the rub comes when he's on these conference calls and he has to answer questions. listen, i get where any ceo might be frustrated with some sell-side analysts and what their own agendas may or may not be, but he's got to answer this question, and he better do it satisfactorily tonight or we're going to see the stock take a big hit. >> you are absolutely right, charles. there's one thing elon musk has

to realize, he's a public company. he has $10 billion worth of debt holders, billions of dollars worth of stockholders. he owes these people an explanation of what he's doing with their money. for him to have this curt attitude and say, look, i'm not -- this is a boring question, let's get on to things i'm more interested in, no, he has to be interested in things his shareholders are interested in. and if he's not, he's going to lose those shareholders and potentially lose his company. i think elon musk is a bright guy, i think he's very innovative, i think he's done a lot for america, but he could stand a little bit of humility and transparency going into this call, charles. charles: i'm looking right now, and it looks like the percentage of the float that's short, 32%. if he can't pull a proverbial rabbit -- [laughter] he may get one of those fights, because he's done it before. >> no, no, that's right. and i think that's why many people in the market today are saying why should i be sitting on tesla going into this call knowing if he says something crazy, it could cost me 10%?

i think that elon musk is in a very precarious position. i think he can do great things, charles, i think it's a good company with great products. however, he's got to look at the bottom line and stop trying to self-aggrandize. maybe he wants to build colonies in mars, but right now he's a car builder. and as long as ford is knocking out 126,000 cars a week, he'd better start getting on that production schedule, or he's going to be left behind in this industry. charles: real quick your thoughts on apple. they put in what is probably, arguably, a perfect quarter. maybe iphones came in slightly less than anticipated, but we're still talking about over 41 million sold. >> isn't that amazing, the numbers that this company continues to turn in? be it just amazes me, charles. and we will see apple be the first trillion dollar company. i remember discussing this with neil, would it be netflix, would it be microsoft? it's clearly going to be apple. we're within $2 of a trillion dollar marketcap. but this -- market cap. but this company amazes me how

it can continue to pull rants occupant of hats and -- rabbits out of hats and be a very, very profitable business. i think apple is a must-own stock. charles: and tim cook does it his way. he continues to ignore the experts, and he buys back his stock, he made the shift in the services, they're ahead of schedule, but he's not making the crazy acquisitions and other things wall street insist that he does. maybe elon musk one day get to that level, we'll see. craig, thanks a lot. >> good seeing you, charles. charles: you too. why is trump sharing concerns china may be getting in the way of north korean talks? we've seen this before, we know it's rankled the president before. we're going to discuss it right after this. ♪ ♪

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♪ ♪ be. >> we're doing well in north

korea, although i happen to think that we're doing so well with china that china maybe is getting in our way, but we're going to figure that one out before you can even think about it. but we're doing well in north korea. charles: president trump signaling that china may be getting in the way of north korean talks as trade tensions continue to escalate. to former deputy assistant to secretary of defense mattis, amber smith. it's not the first time he's sort of suggested this. in fact, amber, he noted that that second visit to china, it felt like maybe kim jong un came back with a little bit more swagger, if you will, and that certainly seems to have complicated issues. >> china has gotten in the way, they continue to get in the way. and this is very important as we move forward with the denuclearization talks. china is the number one influencer over north korea. china is north korea's biggest trading partner, they get all of their food and energy from china, and they really see china

as a partner that they can trust when dealing with what north korea views as a foreign adversary. so we've seen how kim jong un's demeanor changed after he met with president xi early on in the year, and we sort of saw north korea go back to their earlier ways, they made derogatory remarks towards vice president pence which ultimately led to president trump deciding to walk away from the singapore summit. ultimately, it happened, but we're going to continue to see china sort of influence north korea so it will benefit china in the long run. charles: we know north korea, maybe they're torn, they're not sure what to do, and then there's the old playbook that his father and grandfather used to stay in power. but while all of this is going on, this is a country that is being strangled economically. this is a country where one of the premiere border guards, you know, he abandoned his post, and when he deserted, he was found to have worms riddling his body. so there's got to be some serious pressure within north

korea. and on the other side of this is a chance for kim jong un, listen, he had a chance to be on a national stage for a moment to really be a real player on the national strategy. >> kim jong un wants to survive. he wants his regime to survive, and north korea as a nation-state is in a dire situation right now. his people are starving, the sanctions, the pressure campaign has worked significantly to bring kim jong un to the table. but as we move forward, we're going to have to be very careful with china trying to make sure that north korea isn't bringing too much to the table in return. china doesn't want to see a unified korean peninsula. they don't want to see the kim regime fall, and they don't want the western influence that comes along with it. and if there was any sort of conflict to come as a result, they definitely don't want to deal with the refugee crisis that they would get from north korean citizens traveling across

the 870-mile border that they have with china. charles: before i let you go, reports that maybe north korea's building more missiles or, you know, the reports seem to change every day. what do you make of it? >> i think that i have been very suspicious of that. you can't take korea -- you can't take north korea at their word. so i think that we're going to have to make sure we keep a very close eye on this -- charles: right. >> the only thing that we've gotten from north korea so far is the release of hostages. they've returned, thankfully, american soldiers and marines' remains. but a lot more has got to come, and they need to move the scale tremendously in terms of comprehensive, verifiable denuclearization. so we still have a long road ahead of us. charles: amber smith, thank you very much. hey, what seemed pretty worthless just two years ago now bringing in billions. i'm talking about west texas sand. connell mcshane is in kermit,

texas, and he's got the details. connell? is. >> reporter: well, it's a great story, charles. if you want to come to a place that is really booming economically, you've got to come to west texas. you've probably heard about the permian basin in terms of being one of the hottest areas in the world when it comes to drilling for oil. those shale drillers there need the sand. and to your point, the sand you're looking at behind me, or maybe a better shot in some of the drone footage we shot earlier, was worthless a couple years ago. companies led by high crush, where we're getting a great tour from the plant manager greg edwards, moved in about a year ago, and you started to make some serious money in selling this sand to the oil companies. tell us what we're looking at. >> behind me is two wash grant plants. we -- wash plants. we take the raw feed, wash the organics out and then start the drying process to go to our drain field to further dry before it goes into our dry plant to be a finished product for our customers.

>> reporter: i'm looking at it, it looks like heavy machinery. any humans involved in working on this? >> the plant itself can be run by two people plus two people running the equipment to the feed the plant. it's pretty much all automated, a lot of plc and stuff like that in it. >> reporter: again, thanks so much for having us out here. we really appreciate all the access. charles, i go back to you, the great thing, it's automated and it is true there is a lot to that. i was also talking to people out here, it's amazing. we report on labor shortages all the time -- we're going to talk about this later on in the day -- you see it come to life here. if you want a job in west texas, you have one, and in many cases it's in the oil industry which is really, really booming whether it's sand or at the permian basin getting oil out of the stuff. charles: connell, you look kind of hip in that hat. [laughter] all right -- >> reporter: i don't know if hip is the word. [laughter] that i've been hearing. hey, i tried my best. charles: okay. maybe it's the way you wearing

it. we'll continue to monitor this press briefing with sarah sanders. i do want to say though that the press secretary just now saying that there will be updates and reports on tariffs on china and that could top 25%. we have to wait until 3 p.m. eastern time for that. sanders reiterating that china will be held accountable for unfair trade practices. fbn, of course, will keep you updated on all of this. meanwhile, critics suggest tax reform only benefits the rich. well, we're getting some new details of america's big pay raises across the board benefiting everyone. those details coming right up.

♪ ♪ charles: we're moments away from hearing what the federal reserve says about the growing economy. this as we're hearing tax cuts are leading to big raises. workers getting, in fact, the biggest increase in terms of compensation since september 2008. the club for growth vice president of governmental affairs, andy roth, on that. andy, this is the sort of conundrum we're in, isn't it, that on one hand people complain that, hey, main street wages aren't growing as fast as they should, and on the other hand the federal reserve, which may not like it if main street wages

grow too fast. >> yeah. i mean, heaven forbid that we have to deal with this situation, you know? after ten years of just stagnant economic growth, we finally have a president and a congress that actually appreciates growth. so just appreciating the fact that we have to consider this dilemma is great news. but listen, i think more tax cuts are needed. i think even with the pay raises i think there's always room for more growth. charles: so, now, one of the things that we've seen is that, you know, of course the buybacks have increased, but we're also seeing tremendous investment. these capital ex numbers, i think, underreported. they are complul astonishing. but you are going to get this sort of thing where the division of envy, the politics of envy is that there are certain segments of the population that are overwhelmingly benefiting. how do republicans who want this tax cut 2.0 articulate to everyone that, no, it's

benefited everyone so far and will continue to? >> well, remember, the tax cuts 2.0 include making the individual tax cuts permanent. so that affects every income strata out there. also this new idea being floated around about indexing capital gains to inflation? that's going to affect everybody with a 401(k) or an ira or any kind of savings like education for their kids. all to of those assets that they have in their accounts are going to immediately go upwards. in fact, if the president does index capital gains to inflation, as soon as the pen comes off of the paper on his executive order, he's going to create billions and billions of dollars in new wealth, and that's going to affect everybody in the country. charles: where does the fed stand on this, do you think? remember on february 2nd they released the january jobs report, and everything was great, maybe too great. median income was up 2.9%

year-over-year, the dow was off 666 points that day, it struggled for weeks after that, and the fed became -- the fed was in play. so would they allow, would jerome powell allow for main street to finally get a raise? i mean, just a sustained raise for a little bit of time? >> yeah, no, it's a tricky question. i think that, you know, we've had ten years of artificially low rates, and now that we've got a lot of fuel in the tank with the tax cuts and the deregulation, i think we've got to let that play out. but eventually i think we're going to have to start raising rates. it's just a question of when. charles: the ten-year yield hit 3% today, first time, i think, since early june. we were up despite that, but now we're down, and you've got to believe a lot of this is anxiety about what's going on here. can we handle it? i think we can handle a couple interest rate hikes anyway though. >> oh, absolutely. in fact, that's a wonderful problem to have. i think if we can pass tax cuts 2.0, i think if we can settle the tariff stuff quickly --

especially before the november elections -- i think we can absolutely clear all of the uncertainty that's in the economy, and then that could probably handle a couple interest rate hikes. charles: all right. andy, always nice talking to you. thank you very much. >> thanks verying for having me. charles: we are just moments away from this ned decision -- fed decision. home prices, they have kept rising and now maybe it's a problem. we'll discuss it with one of the country's best next. ♪ ♪ drive safely.. . with drivewise. it lets you know when you go too fast... ...and brake too hard. with feedback to help you drive safer. giving you the power to actually lower your cost. unfortunately, it can't do anything about that. now that you know the truth... are you in good hands?

charles: we've got breaking news. wells fargo agreeing to pay a $2 billion penalty for allegedly misrepresenting the equality of loans used in residential mortgage-backed securities. now, this isn't the first time a big -- first big fine this bank has a paid, this as they try to clean up all their past controversies. meanwhile, the federal reserve decision's going to be just moments away. the ten-year treasury yield at 3% for the first time in two months, yet home prices continue to make steady gains. real estate specialist katrina campings on what we should expect if rates continue to rise. katrina, nice seeing you. >> great to see you again, charles. charles: we have seen a lot of disappointment in is some of the official home data numbers, right? we've seen new homes miss, existing homes miss, and i'm starting to feel like, you know -- oh, and mortgage

applications being very sol full, mostly down. is that a function of price or interest rates? >> well, housing prices are actually going up across the board. we're seeing a higher increase in places like san francisco, seattle and las vegas. but house prices are actually increasing faster than inflation rates, faster than wage growth, and so although it seems like everything is up and up, it is ultimately affecting the amount of transactions occurring because there also isn't enough supply. and we also are seeing the young inner generations -- younger generations entering the market more consistently because they can afford a down payment, or their parents have loaned them a down payment. we're seeing the younger generation is competing against the empty nesters which are also trying to downsize. another factor is a lot of home sellers are not putting their homes on the market because it's

more expensive for them to actually downsize. they locked in a very low interest rate back in the day, and they're also fearful that if they do put their house on the market, it will sell very quickly, and there's nowhere for them to go. so all of this is really causing a slowdown in existing home sales as well as new construction home sales because home builders are not building as much as they should be because the cost of also doesn't make sense for them to build. they actually can't. because of labor cost, material costs to build lower income housing. >> because all of structural issues that kept prices high and elevated is it starting to have an impact? it feels like there is disappointment maybe there is issues with, there is certain limit you can go to before people can continue to pay isn't. >> yes. of course. it is affecting affordability. it is not going to be able to

continue at this rate, because people will not be able to afford these homes. as i mentioned, unemployment is actually at historically very low, but the wage growth is not catching up with home prices. it can't continue. i have a feeling in 2019 we'll start to see more of a slowdown and it is also very regional. i think homebuilders will look for other ways to cut on costs and be able to finally start building. so there is two factors. there is existing home prices. then there is new construction. both of them are actually pretty different. you're absolutely right, it can't continue. why we're seeing a slowdown in home sales. charles: katrina, thank you very much. always appreciate it. >> thank you so much, charles. charles: keep it right here on fox business all day long. we have so many developments going on. we have economic data. we've got the federal reserve. we've got earnings after the bell. make sure you catch me tonight on my show, "making money,"

6:00 p.m. eastern. i will try to hash it all out but right now trish regan takes you to the next important hour. trish: thank you so much, charles. breaking now we are seconds away from the federal reserve announcing the decision on interest rates as the fed's two-day policy meeting comes to a close. what will they do? stay steady or go up? i'm trish regan. welcome to "the intelligence report." what will they say about the future. how is trade affecting all of this. moments from now officials will release new details about their monetary policy. trying to control inflation even though we don't have a ton of it and trying to keep the u.s. economy overheating but again we don't have a lot of inflation. they expect central bank to raise interest rates. they want to know will fed change its course? is there anything out there, that will cause the fed to say,

hey, maybe we'll wait? i will straight to washington, d.c. d.c. where we get the announcement. according to edward lawrence right now. edward. reporter: the federal reserve maintains the federal funds rate at 1.75% to 2%. they say household spending an investment, business investment grew strongly. that is the new term they use, both household spending grew strongly. overall inflation near the 2% target. it remains in the space. the fed maintain as 1.95% interest rate required on excess reserve balances. keeps the primary credit rate at 2.5%. the risks according to the fed to the economic outlook appear roughly balanced. the fed considers international development and future adjustments. they did