tell our viewers, president trump tweeted out the interview i conducted with lou dobbs on this set. he tweet the whole thing. there you have it. it was mostly about lou. it was on my show. i'm perfectly happy. time's up, neil, it is yours. neil: pity he didn't tweet about me but that's fine. buddy, have a great weekend. where we stand at corner of wall and broad, the dow is down 228 point. no matter how you slice it, unless there is miraculous turn around for the dow, this is the worst week of markets. you have to go back do christmastime last year we experience the losses. we're keeping a close eye. a lot is driven by trade and on part of chinese. they will retaliate for all of this. we don't know what that means, because it is open ended. you don't know what the fear is on wall street. could they cut down on debt they own in the united states. could they start punishing

apple. be that as it may, the s&p is falling for the fifth straight day. again it is on track for its biggest loss since going back to december. the 10-year note, which is a good barometer how people are feeling, if you are nervous, park your money in notes and bonds, people are doing that, these are the lowest yields in the better part of three years. we're keeping an eye on that, keeping an eye on other things we're waiting for. president might comment on that or all the above. he wants to up the trade ante. the latest besides affecting tariffs virtually on everything we get with china, he is talking increasingly now it starts at 10% with the remaining goods. it could go up still further. as stuart was pointing out. a lot of other goods and services we're talking aabout could easily ratchet and move in different directions. we'll keep an eye on that. also keep an eye on what has been happening on the precious

metals front. gold, for example, getting a lot of buying interest, a little less settled but there had been a runup here. again the big concern seems to be that the federal reserve now is going to have to get off its one an done notion which in the eye of the beholder could go variety of ways, maybe start cutting rates more aggressive been than planned because of the trade quagmire. edward lawrence at the white house, she might have more what the chinese are thinking in response, what the u.s. is thinking in response to that possible response. edward? reporter: the response to the response to the response. the chinese are saying they will emly meant countier measures if trade tariffs go into effect on september 1st. the uncertainty around china trade certainly jumped. white house economic advisor larry kudlow says president donald trump simply wasn't happy with the progress of talks that happened this week. although he says it is china will have the problems if this

trade conflict continues. >> there also a lot of shift in production and supply chains out of china. it is doubtful they will get those markets back. so i think the impact falls very heavily on china. and our consumer sector remains strong. reporter: today a spokesperson for the chinese foreign ministry saying china will not accept an inch on major principles and will not accept extreme pressure. that is in response to president trump announcing 10% tariffs on about everything else that china imports into the united states starting on september 1st. our chinese trade sources say china will not add back in any of the concessions the u.s. says they deleted. >> we had a deal in place. the problem was at the last minute they came back and tried to renegotiate that deal. we understand that but the president said he is not going to sign a bad deal. reporter: china also digging in here, face-to-face talks are

scheduled for september again. we'll have to see if that happens. if the administration sees job numbers just like the numbers that came in today, they do believe that we can hold out for a better deal on this. jobs, 164,000 jobs created in july alone. that makes the average number of jobs per month this year 165,000. average hourly wages rising 3.2%. unemployment rate at 3.7%. this is all very good showing the status quo is continuing. it also indicates that at the economic expansion seems like it is contending. neil? neil: that is if the trade war doesn't continue. so we'll watch that very, very closely. edward lawrence, thank you very much. as i said stocks are extending their losses from yesterday. we should posit anything sensitive to trade multinationals that depend on

trade with china surprisingly not get caught up in the downdraft. there is a lot of to digest. there could be overreaction. federal reserve is more inclined to easing interest rates, to buffett all of this. way too early to start adding conjecture to all of this. what we know now the dow is looking at one of its worst weeks of the year. for the s&p 500 undoubtedly the worst week of the year. let's get the read from deirdre bolton at new york stock exchange. >> hey, neil. a warning that president trump impose, that remaining impose tariffs will limit consumer purchases, limit hiring. national retail federation are one group making voice heard. walmart, amazon, those are two heavyweight members of that group basically saying this will hurt u.s. consumers. it will hurt our companies. if you look at the retail index,

the s&p 500 index, it fell more than 2% yesterday in reaction to the president's tweet. today retail stocks are down again. trade retail association. counts them as members. clothing, toys, home goods, electronics. i went through the list, pages and pages long, neil. roller skates, writ watches, so many items that people buy every day. beijing as we know threatening countermeasures if the u.s. does go through as planned on september first. saying consumers take a hit more than chinese manufacturers. they say chinese manufacturers produce as much as 42% of the clothing, 69% of the footwear that all of us buy without

thinking twice about it. walmart in may is trying to insulate customers. they're trying to switch up the supply chain and basically find new manufacturers. larger context, worth noting, retail, neil still outperforming the s&p 500. one of the groups falling, biggest weight on the market, that is technology if you look at all big tech names they are lower. facebook, amazon, netflix, google, apple, all lower, particular weakness in chip-makers. we know that china's huawei named 30 u.s. companies as so-called core component suppliers. chip index down 2%. nasdaq on track to close lower

for the fifth straight day. longest losing streak definitely since march. neil, back to you. neil: thorough as always. thank you very much, deirdre. retail, multiples of this on if this starts september 1 we mentioned walmart. touched on target. amazon is retail play but thatbe affected by this, but there is separate category hurting retailers those already announced store closings this year, could extend that, they're particularly vulnerable to this, keep eye on dressbarn, payless shoe, family dollar, gymboree under intest pressure because they have been closing store. nothing have to do with the china situation but their own vulnerabilities. there are primo retailers, secondary retailers, those closing a lot of stores already retailers. that latter group we'll keep an eye on here. they could be vulnerable what is

going on. all right, "barron's" jack hough, gordon chang, who saw a lot of troubles with china. what now, gordon. >> we'll have a period of prolonged friction. that interim deal, president trump, xi xinping, chinese ruler negotiated at g20 that was really favorable to china. china basically gave up nothing. they were going to buy ag products anyway. they got a critical concession on huawei. the thing that is important, china couldn't even honor that deal. that suggests to me something is really wrong in beijing. neil: you say really wrong, someone there changed their mind? >> someone there changed their mind or the political system is so frozen they cannot actually do what's good for them. because they had this sweetheart deal trump gave them. clearly they can't go forward on it. i think there will be continued friction largely because we don't have a counterparty on the other side we can deal with. neil: do you think, jack, our markets are prepared for this

not being resolved at all? >> i don't think what is happening in the market right now, the market passing judgment on the worthiness of this cause for the u.s. it is just a matter of expectations. people thought that we were in talks, there was a truce a trade truce here. that would carry us through the election. that's wrong. now there might be a cycle of retaliation. people are worried about it. what we've seen announced recently, it could cause 1% of s&p 500 earnings over the next year. doesn't sound like a big deal. but earnings are not really growing right now so it feels like a lot. we talk about the fed put, things get bad, fed cuts rates, it will make things better. i'm not so sure we have a fed put this morning. i think we might have a trump put. the white house is watching the context of the economy, stock market. if the stock market, economy stay strong in relation to the trade talks i think we're okay. if we see a lot of weakening here, you will folks motivated to find a deal.

neil: you say put. does that mean you doubt the federal reserve will have additional rate cuts or doubt with they will have any effect regardless? >> they will have additional rate cuts because of $13 trillion, negative yields in europe. sending too much capital to our treasurys. it is making the dollar too strong. neil: that will supersede china alone? >> automatically you got a big stock market rally when you start cutting rates. the past two rate cutting cycles. you didn't get that first year. you had continuing decline. with this one it is following that pattern. neil: gordon the argument between you and i, how times we mentioned it, that china needs to steal a lot more than we do. china is obviously rolling the dice if we interpret delays in this, figure we can wait him out? >> i'm sure they're thinking that. it is more than just waiting it out. it may well mean that xi xinping can't actually force other

people in the chinese constituency to buy on to a deal. that is what happened at the end of april, when he made across the board concessions to u.s. trade negotiators. when the agreement came back from beijing that was supposed to incorporate all the changes, none were there. xi xinping could not force state enterprises to agree to the deal. neil: by the way their argument has been you misinterpreted us, we didn't think these were preagreed to conditions. doesn't matter, didn't happen. >> chinese will say anything, neil. neil: okay. >> actually i do believe that across the, you know, u.s. universe, everyone thought negotiations produced those concessions, it is not just trump, it was lighthizer. even mnuchin, you can see he was visably crest fallen, he knew he chinese were not honoring the agreements they preliminarily made. there are real problems over there. china has an economy not doing very well. you have got the problems in

hong kong, which eventually chinese leaders may think are existential for the communist party. right now there is a lot going on in beijing. we don't know exactly what is happening. but it is not a good story. neil: chinese already promised to retaliate in response, ask about what you think they would do? >> more tariffs? china has the advantage of being able to make top-down decisions on what people buy there. they can change their mind in a hurry about their taste for big-name, popular american goods. neil: they have done that with apple, favoring huawei devices. do you think they would for example, "nuclear option," stop buying our debt or selling our debt? >> they would create a large as a problem for themselves if they do that these are strange times. the context, manufacturing, our economy right now, it is two stories. manufacturing is quite weak in the u.s. right now.

this really doesn't help. but the consumer right here, retail sales, probably increased 3 1/2% this year in the u.s. you're going to see a lot of store closings who are than you see last year. you will see retail bankruptcies. that is not about a weak consumer. that is about too many stores for too many years. there will be a reckoning. we're writing about that in "barron's" magazine, the coming retail reckoning. that is not about a weak retail consumer. neil: you you were shaking your head about the sell debt. >> they have to sell dollars to support the renminbi. they have sold 800, $900 million since september of 2014. all the things china could retaliate going u.s. companies those things hurt beijing more than they hurt us because china needs manufacturing, it needs investment. if they go after u.s. companies even harder than they have in the past, it means that they're scaring off the japanese, south koreans and europeans.

beijing is lower level officials are apoplectic when they hear xi xinping talk about going after u.s. companies. neil: a lot of those companies, you talk about south korean companies, they're also moving out of that neck of the woods as a precautionary measure. that won't change, deal or no deal. >> u.s. consumer, all these things will hit an cause price increases because they are consumer goods because of tariffs. nine to 12 months, they will be made elsewhere, this issue goes away in a relatively short period of time. neil: jack overreaction today, or just about what you think? >> markets are still up big this year. earnings are not really growing. stocks are up huge this year, in the context how far we have come, this move is no big deal. i think u.s. stocks at 18 times earnings, even bonds two or 3% with rates going lower, that might be the best deal you get for some time. neil: fair enough. we will still play scary music and red arrows.

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neil: welcome back, everybody, there is one sector adding to the broad-based selloff, that would be the utilities sector, a flight to quality, a haven, the old line a place for widows and orphans, it is safe, not sexy certainly not exciting. that is only one of the 11 s&p 500 sectors, that is not slip-sliding away. so there is that. dow jones is down about 169 points. let's get a read on all of this politically because this could have impact. kamala harris was among the first of the presidential

candidate to put to and two together to say this drags on. this will impact the economy. most democrats are leery of raising the subject in a good economy, to do anything about raising it as an issue in the campaign. if this is potentially an issue, they probably will exploit it. glen hall joins us right now, "dow jones newswires" chief editor. glenn, if you think about it, the first i can remember a presidential candidate cite what is happening on the trade front, the need for the federal reserve to lower rates as, would be an opening salvo, right, on the economy, what do you think? >> it's a bit of a gamble, taking a shot if we see further erosion in the stock market, confidence reflected in the stock market, you see that trickle down into the prices that consumers will be paying for goods, then you might be able to mcthat case, that this

president has made bad policy for american workers. i think that's the strategy there but, neil, it is a gamble because so far we have one of the longest, we have the longest period of job creation on record. there have been manufacturing jobs created during that part. president president trump won largely in 2016, that i will help workers and bring back these jobs. neil: manufacturing job growth has stalled a little bit. that could change. but i have a feeling that that is what democrats want to seize on, those gains, particularly when they visit the industrial states like michigan, where they had the recent debate, that will resonate. will it? >> again it's a gamble they're making. president trump actually made inroads in some of those states. neil: that's right. including winning michigan. >> looking good in pennsylvania during that period. so when you look at where the union workers are strongest, it is also in those same states, michigan, ohio, pennsylvania,

illinois, and of course new york and california. neil: you know, leaving just union workers, workers in general out of this to talk about shoppers, the fact that with this latest tranche of tariffs on $300 million worth of goods, those are more consumer related, those things you would see at walmart or target. no mystery why those issues are taking it on the chin today. in other words unlike some other tariffs that have been in effect for a while. they have been in industrial base. a lot of companies, contractors absorbed that, there is delay getting them to the united states as well. this group, not so much. is that going to change the equation here? >> i think we're already seeing the equation change a little bit. when you look at trade numbers came out today, you see over the past six months, china dropped to number three in terms of our chief trading partners, canada, mexico filled the gap and risen. everyone needs to bear in mind,

in terms of political consequences here china is not the only supplier to the u.s. consumer. neil: glenn, your thoughts on federal reserve role in all of this. they kind ever intimated even though they didn't out right say it was kind of one and done this week. maybe because of escalating trade tensions, maybe the president will force their hand we could see additional rate cuts, what do you think? >> i think chairman powell was walking a fine line and having a hard time to do it, the point he made this was preemptive move, largely inspired by the challenges with international trade we're facing right now, so then if you see further moves in that direction where this drags on a lot longer, that may force his hand. he wants to signal this is one-off there should be expectation there will be more. neil: he has been quiet as a church mouse since. we'll see it. always good having you on, glenn hall, voice of calm and reason when we need it. to put it in perspective, flip

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to learn more about the range of aarp medicare supplement plans and their rates, call or go online today to request your free decision guide. oh, and happy birthday... or retirement... in advance. neil: welcome back, everyone. interesting thing in a selloff money has to find a home. you don't find normally every single sector up. at least for the part of investors, professional, not so professional is bonds. they might not yield back, they are safe place to yield cash, and they are backed by the united states government for the time-being, and they are a nice thing, no one has defaulted on a federal government obligation, at least just yet. the question, is by extension is it helping people buying a home or refinance the one they're already in? not so much, to greg mcbride, bank rate chief financial

analyst. greg, that is one anomaly that is kind of weird, i wonder what you make of it? >> in terms of the housing market, that we have stronger economy each and every year, unemployment is coming down. people are making more money, yet we're selling fewer houses t doesn't add up. lower mortgage rates will help that, but really only kick the housing market from first gear to second gear. not enough to blow anybody's hair back. neil: play this out for me, record low interest rates or certainly generational low interest rates aren't doing it what will? we talked about anecdotal evidence, homes staying for sale with signs out longer than they used to. i'm not comparing it to meltdown 10 years ago. elizabeth warren says she sees that happening all over. can you? >> no. what is hurting the housing market right now, affordability, limited inventory, particularly for entry level buyers and

middle income buyers. there are a short of homes in that price range. those that come on the market they tend to go pretty quickly. there is a lot of competition. people can, put in offers on multiple places and get outbid every time, those kind of things. yes the market has slowed. but, tight inventory is keeping people that want to buy homes or otherwise might, it is keeping them renting. keeping them in the home that they're in, rather than trading up. neil: i don't know if there is anything with new home purchases and the like, but i noticed the fha cracked down on some qualifications for getting home equity loans, additional mortgages, second mortgages, the like, by requiring a little bit less of a bang for the buck back, in other words 80% loan-to-value, now versus 85%, in some cases up to 95%. what do they see, folks like in the housing arena are watching? >> well, the fha does tend to

have the highest delinquency rates relative to all government programs. so i think a tightening there is certainly overdue, particularly when you're talking about those instances where people might be taking cash out. the fha is really defacto lowdown payment program for the lot of first-time home buyers, delinquencies tend to be higher. i don't think that is necessarily problematic. i think that is prudent, given the fact that the economy is still strong but we may well be at a peek in the economic cycle, if things start to slow, you don't want delinquencies, defaults starting to pile up. neil: in other words pierce the bubble before you have a bubble i guess. greg, good chatting with you. have a good weekend. >> appreciate it, neil. neil: we're following a lot of other developments on the world front that have nothing to do with china. blessedly concerns other crises that could be potentially bigger. north korea third time this week firing off missiles. why do they keep doing that? tensions with iran, all of

sudden right now with a nuclear treaty we just ripped up with russia. what happened there? after. ♪ ♪♪ ♪♪ ♪♪

neil: other presidents noticed that the russians were cheating when it came to nuclear treaties and the like. only this one decided to say why do we have this deal? i will rip it up. that got a lot of kerfuffle from

here. people wonder what vladmir putin does in response, does he weapon up and do we weapon up in response to his weaponing up? what is happening now? reporter: the u.s. warned russia six months ago, it would do this walk away from the treaty. new defense secretary mark esper recently made the case to law makers. >> we cannot stand by while russia arms itself with intermediate range missiles, ssc-8s nuclear tipped, have most of europe within their range. reporter: nato calls russia the new missile the screwdriver because it is messing with the west. not everyone thinks it is wise for the u.s. to pull out. here is the u.n. secretary-general. >> the world needs inevitable break on nuclear war. this will not reduce the threats posed by ballistic missiles. reporter: china, iran, north korea not party to the inf treaty. all have huge stockpiles of these types of missiles.

another reason the u.s. wants to pull out, neil, in addition to russia's violations. >> there would be deployment of land-based intermediate range missiles to the pacific as commanders are recommending if we're not in the inf treaty. >> it is unfortunate that the russians chose to violate the inf treaty. we were ultimately the decided ruse, the previous ruse the administration was taking with two parties only one complying. reporter: u.s. will test a new intermediate based missile from grand launchers, based on the tomahawk missiles on warships and submarines, used to strike syria in 2017 and following year as well. the inf treaty only banned land based nuclear missiles. neil. neil: thank you, lucas tomlinson. whether this has any effect on oil prices rebounding a little bit here, of the that is a leap,

what happened yesterday on free fall of oil prices with the fears on slowing economy, trade tensions, with unwound, global friction does not help oil prices here t does help oil reverse here though. that is clearly the case. john how much meister, joins us, former shell oil president. john what was real then yesterday's selloff reflects fears of a global slow down or today's that it was overdone? >> i think the real issue is concern about global growth, neil. the fed comments earlier this week, with the idea that germany manufacturing is in recession, that china is slowing, in fact if you get outside of north america there is not a lot of good economic news around the world these days. so i think that has the traders a bit spooked on the growth demand for oil. and we're producing more than we need currently.

it is not a glut. i wouldn't call it a glut today, but i would say there is more than enough to go around. when the traders look at it, it is really a buyers market. they can command their lower price in order to buy and traders go along with it. neil: do you think though that the frictions, walking away from this nuclear treaty with russia, iran, disbanding that treaty, what is going on now with north korea, constant missile tests, it is just adding to the idea of global uncertainty which typically, not all the time, but typically helps lift oil prices? >> well i think that's why we're still in the 50s, because there is enough global tension, whether it is iran's behavior around the straits of hormuz, whether it is the difficulties two china, u.s., russia, u.s., whatever it may be, that is adding a certain level of tension which doesn't lead to a freefall in the oil price.

what i worry about is if things, if things do calm down, we could see much more severe oil price reductions later this fall. neil: we'll watch closely, john. always learn a lot. i appreciate it. john hofmeister, former shell oil president. normally as comes to oil prices as john reminds you, basically supply and demand, strength of global economy. all the stuff gets headlines and attention as it should, basically like that. when it comes to companies it is earnings, earnings, gyrations notwithstanding f their earnings are looking good which they are the market should absorb the body blows. the question will they continue to? after this. all in one place. because when it's decision time... you need decision tech. only from fidelity.

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rich market or not. there are a lot of nuances to it. earnings buy and large are holding up. in the latest quarter, one they expected to contract, in other words less than year ago period, they are running 6% clip over the year ago period. so that is the win presumably yu hear from the market. not everyone agrees with that. the prospect that american companies are doing better than any of their counterparts around the world. that is the one tonic for bulls. tim phillips, americans for prosperity president. tim, good to have you. that is the idea a lot of bulls cling to, we might be a battered game lately but we're the only game in town for investors, that town being the world. what do you think? >> this economy is probably the strongest economy overall in the world. there are troubling signs, neil. job growth averaged 223,000 jobs a month last year. it is 165,000 jobs average

growth this year. gdp down from first quarter to the second quarter, down about 33%. the worst thing looking to us, protectionism, tariffs, weighing on economy, especially american farmers, pork producers, a lot of businesses, and government overspending, neil. you talk about this own the show. you think bipartisanship is dead in washington? give them a porked up bloated budget they will vote for it. with a decent economy the most troubling sign, neil, we have a deficit this year that is over one trillion dollars. neil: we will for two years in a row. it could be even longer. >> yeah. neil: that is a pox on both parties houses but to your point if you cannot correct that in strong economic times, you know, don't expect it to happen when they're weak. >> correct. the silver lining though, two things are happening that we believe are propelling this economy. number one the tax cuts and tax reform that congressional

republicans did and trump championed an signed, they are still having a powerful effect across this economy, across this country. the other thing, it doesn't get a lot of credit because it is hard to point to. neil, the effort to get rid of needless regulation and red tape the administration is doing, it is boosting productivity, wage growth for this economy. it is the secret source we believe helping to propel a lot of prosperity in this country. it is worth highlighting. neil: no, i always hear from people, here comes never-trumper cavuto on this. my argument with the tax cuts, with a lot of regulatory relief you're quite right to point out, tim, preceded the tax cuts, got this going, charging up before they even took effect, this is the ideal time to address some of these spending issues but we're not. now the president says you know, sign this budget deal and we'll be fine. we'll get to the cutting later. do you think that will ever happen? >> no. i haven't seen it.

both parties have failed. the bush administration back in the day over a decade ago failed terribly on this. the obama administration failed terribly. thus far this administration is failing terribly. whether mitch mcconnell or nancy pelosi or paul ryan or john boehner, spending goes through the roof. it is something that is weighing on the long-term health of our economy. it is one reason that there are troubling signs out there that we have to be aware of and it is something that both parties don't want to address but we have to do it, neil. it is something that's, owing 23 trillion in debt. neil: people remember paul ryan, the images that hate groups put out on him that he was trying to fling granny off a cliff, i thought was a guy dressed up as an older woman, but that is neither here nor there. people remember that, the hell he went through, saying nope, we're not doing that. >> well the good news is, we're

still adding jobs, wage growth is up, that is not something getting a lot of attention. it is up over 3% to date from last year. we're seeing good things happening but i'm telling you, if you combine protectionism and tariffs across the world, with overspending, government overspending is piling up over a trillion in debt even with a good economy, that is a troubling sign we have to address. both parties have to do it. neil: they both have do put they don't, do they? thank you, have a good weekend, tim phillips. it was curious timing issue here, the pentagon would sign off on a 10 billion-dollar contract with amazon and mysteriously stalls. why is that? (food grunting menacingly) when the food you love doesn't love you back, stay smooth and fight heartburn fast with tums smoothies.

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neil: took a look at 10-year note it's a popular trading instrument. loans are pegged to it, car loans are pegged to it. it is at 1.88%. i mention this to the concept of subject of our debt, right now as big as it is, $23 trillion plus, it is cheap to keep. if you are in debt, it is cheap to stay in debt. if you're a saver, doing all the right things. you're getting everything right but getting screwed with the paltry rates. be that as it may if you're a nation like ours, spendses a lot more than it ever takes, will continue to do so until the end of time, terry jeffrey can tell you it is your only salvation. he is the cns news editor. imagine if rates were half-point higher than they are now. exponentially that would be hundreds of billions of dollars on our debt, right? >> exactly, neil.

eventually they will go up. they're at a very low rate. the average debt on the public debt but they are going to go up. we're in the 10th year of the current growth cycle. the last recession, ended in june 2009. look back at fiscal 2009 what president bush did when he was leaving, what obama did when he came in. bush when he left had to pass a massive bill to bail out banks,. neil: right. >> obama had stimulus. this will be a huge year for debt because we're trying to get the country out of recession. we'll run a trillion dollar deficit this year. fortunately as you say we'll pay low interest rates. at some point we will have a recession. and at some point the interest rates are going go up. this government will focus more than anything else paying interest on the debt. neil: at rate we're going, our interest will soon exceed what we put out for defense, unfathomable as that seems right

now. terry, i'm wondering why there isn't more aggressive attempt on the government's part to refinance a lot of this stuff? just put it all under one umbrella? that is easier said than done, simplistic, individuals do that when they take out a home equity loan, take advantage of low rates, get a new mortgage, could that be done on uber basis, a big monolithic basis to get it under control? >> it would be nice to do that, neil. another disturbing part about the debt if you look at it, talk about 10-year treasury notes, a lot of the u.s. debt now is in bills and notes. it is not in 30 year bonds. neil: you're right. >> so a huge amount of this is being rolled over every month where the short term bills and notes are coming up. the treasury has to redeem them, to go out to float new debt. if we get a spike in interest rates, that will have a pretty rapid impact on the overall debt, precisely it is not in long-term treasury bonds.

so that is, that is a problem. that is one way that the treasury kept the debt down, by keeping things on a shorter term, paying people that lower interest rate. neil: i used to hear from the obama folks when they were in the white house you talk about the debt so much. shut up. i hear from the trump folks, you shut talk about the debt too much, shut up. i heard that going to bush. this worry never realizes itself. we're merrily going along, economy is humming, first reason why i mention it, it is a big number and second a lot of variables could change things quickly leaving aside a backup in rates which doesn't appear imminent, but big buyers of that debt retrenching, like china for example. how realistic is that? >> well if you look at china's ownership of u.s. government debt, it peeked.

there are not buying our debt that is a bad sign. with the trillion dollar debt, and government has a deal we increase spending and debt limit is suspended until july 21st, 2021 until after the election, if something happens we need to spend more money, who will buy the debt? aren't we going to have to increase interest rates? it is rational to assume at some point we'll see a significant increase in trims, it will absorb a lot of government now is spending on other things. and we're going to face a financial crisis. that is where we headed. when it happens, people will say why didn't you see it coming? we see it coming. it is obvious. just politicians in washington, whether the republican leadership, the democratic leadership, or president trump, they don't want to do anything about it. neil: you're right. it is bipartisan bypass here. terry jeffries, cnns news editor. you've been bemoaning for a long time. thank goodness for that. it is worth bemoaning.

thank you, my friend. be well. >> thank thank you, neil. neil: the sort of arrogant argument we have where else will enviestores go, safe haven for the world, money will always come to us. same excuse we raise, we're different than a lot of third world countries because we can print our money as of that is a badge of honor. eventually the badge and the pin hits you. more after this. ♪

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neil: all right. welcome back, everybody. we're accelerating on the down side right now. you don't like to go tick by tick and minute by minute but for the time being, down about 233 points. most of the dow stocks, particularly those vulnerable to trade, you know, the usual cast of characters, caterpillar among them, american express, walmart, home depot, by extension getting outside the dow to amazon, those that would be directly affected

by an extended or potential extended accelerating trade war and financial issues as well that would be exposed to the whole world kind of slowing down. obviously it lessens demand for activity in the financial community would be compromised. that's one of the things playing out in these markets even as interest rates go lower and lower. the fact of the matter is taking aside today's noise, i don't mean to minimize it, the underlying economy remains pretty strong in the latest period. 164,000 jobs added to the economy, unemployment rate at 3.7%. that backdrop is noteworthy in that the total labor force now is at its highest level ever and that's something that a lot of people are bullish on the economy and bullish on the market saying that is the stuff you should be paying attention to, and that's a nice backdrop for all of this. also, we are in the middle of earnings season, about two-thirds of the way through it.

i might have spoken before we had the genius called charlie brady who follows this closely, catches the mistake i made and wants to embarrass me by getting me to correct myself. i said that we were expecting a contraction in the quarter which we were, i was accurate on that, but charlie pointed out we are only growing at about 2.5% clip versus the much higher number i mentioned. okay, charlie. you win. all right. keeps me honest. jackie deangelis on where we stand so far on this trade front, because this is going to be a very crucial part of the equation. we can absorb the trade blows if the underlying economy and earnings are fine. all right. to jackie. jackie: good to see you. well, the worries are out there and that's the reaction you are seeing in the market today. it's sort of permeating investors and their psychology. you have the president's announcement of more tariffs on china but the ratification of usmca still in limbo. from a trade perspective, china

isn't the u.s.'s largest trade partner anymore. during the first half of the year, imports from china to the u.s. down 12% year on year. exports to china down 19%. that's according to the commerce department. then of course, there's the eu. the president is going to make an announcement at 1:45 so we will be watching but on july 2nd, the u.s. proposed new tariffs on goods from the eu of the $21 billion of goods that the u.s. said in april would be subject to tariffs. then of course, mexico and canada. there was some hope when the tariff border issues were resolved back in june and that a quick passage of usmca would at least quiet things down on that front, but not a resolution just yet. canada is the u.s.'s second largest trade partner so something to worry about. mike pence said he hopes the passage is going to happen this fall. the democrats, though, dragging their feet, still pushing for certain improvements in the fine print. august is typically a slow period for stocks. things tend to pick up in the fall when vacations are over and

it's back to business. the hope now is that a lot will get done in september and that certainly adds a lot of pressure. neil: thank you as always, jackie deangelis. how you doing? let's go to charlie gasparino on this. we have jillian melchiore and gary kaltbaum. where is gary? florida? there he is. >> florida. neil: all right. gary, let me get your thoughts on the trade thing and how it could disrupt maybe what is otherwise a good economy, good earnings. what do you think? >> let me start by saying since the change of stance yesterday, apple's stock is down $65 billion of market cap. so what's $65 billion of wealth, that's just one name. therein lies the worry. look what markets are doing. they are very smart, they are reacting to something and my biggest worry is the continued change of stance. how can business prepare when one week there's a tariff, the next week there isn't, the week

after there is. you are talking about thousands of businesses on thousands of products that have to prepare on supply and demand and profits and losses and manpower and they can't. that is a worrisome sign. neil: jillian, the argument here seems to be it can spook people, too. if in doubt, just check out. don't be part of these markets. don't go to the store and spend. in other words, it becomes a self-fulfilling prophesy. >> there's a lot of uncertainty in the market right now about trade. in many ways, it's cushioned because president trump has been aggressive about deregulation and about the tax cuts. we are seeing that buys some wiggle room but having trade wars, having uncertainty like this, it functions in the same ways that obama's regulatory i guess assault on the market and assault on the economy worked. people just don't know what they are going to get hit with next. neil: what do you think? >> i'm trying up a cha

chart, dow jones chart since -- neil: on that little phone? >> on that little phone. neil: you are blind as a bat. >> i'm not getting any service in your studio. just letting you know that. there's a problem with that. if you kind of tracked the dow since trump started the trade war, it was literally the trade wars, not just china. it's all over. track the dow since then, it's kind of flatlined. it has not been the raging thing that everybody says it is. neil: since the first battle was announced? >> since he really started going after everybody. what would you say that is, gary, like -- neil: i think it's 5%. we were up 5%. >> charlie, just remember something. we have european auto tariffs. he took them off a few days before they were supposed to go on. he comes out with mexico tariffs, a week later they're gone. three other times he said he would put tariffs, he did not do. if he decided to do this one or more, it is going to affect the

market which means it will affect the economy. >> it's already affected the market. if you took the dow from january 2018, that's about the time you just got the tax cuts passed in late '17, so january, take it from january 26, that's what my computer is showing, 2018, the dow was at 28,600. where is it now? 26,300. neil: by the way, i don't want to interrupt you. the president did in fact sign this budget deal that, you know, avoids a debt ceiling fight for the next couple years. in so doing, it's going to add a couple trillion more to our deficit. >> you are so obsessed with the deficit. neil: i am. money in, money out. >> you should be obsessed. neil: i don't want jillian and her young impressionable generation -- >> don't you want to be part of the trump party?

neil: what do you think? >> i'm frustrated both sides of the aisle are coming together to spend more. it's a bipartisan thing. spend, spend, spend, spend, spend all the time. i think it's really dysfunctional. >> why aren't you enjoying the trump economy? >> i certainly am enjoying the trump economy. >> can i get back the my point? neil: yes. you can get back to your point. >> the dow has flatlined for nearly two years and the reason why -- neil: you are adding up to today. >> it flatlined. the reason why is because of trade. >> some of this trade stuff, i think it's really important to keep in mind, it's a bit of a delay. it does affect the supply chain. we are starting to see it 18 months in. this is when it starts having an effect. people have surplus supplies, but they are making decisions that will have big economic repercussions. >> can i add one other thing?

europe is very fragile right now. the german ten-year is trading -- neil: it's always been fragile. >> asia is fragile. around world, markets are fragile. you start getting into a real trade war, if he starts putting on more tariffs, i think the house comes down. look, i'm very careful with my words. i'm not into hyperbole. but i think we got some issues going forward if this continues. it's a big mistake at this juncture. neil: to jillian's point, this latest round of tariffs is more on consumer related items. we were showing baseballs, that sort of stuff, diapers, versus the other tariffs that affected largely industry. they could or might not pass all that along. by and large, it does get back to the consumer. but in this way, that's why retailers take it on the chin. >> one of the problems, gary

pointed out, you did, too, the uncertainty aspect of it. this administration basically, it's one thing if they just isolated china, did not drop out of tpp, did not go to war which was essentially a trade coalition against china, and did not go to war with mexico and canada and everybody else, and just focused on the real problem. the bad actor in the world is not mexico, okay? i don't care what the president says. nafta did not cause detroit to implode. it just did not. the real bad actor is china. you know, peter thiel does a good job explaining that today in the "new york times." how we engage with them and we didn't really get much out of it. trump is right to go after them. the question is, why didn't he put together a broader sort of coalition against them. you know why? because there's two types of people talking to trump on this stuff. there's peter navarro and used to be steve bannon, very nationalistic, thought trade wars were good, then larry

kudlow and mnuchin on the other side saying don't go there. you know, no matter what you say, navarro has the president's ear. he listens to that guy. >> it pains me to say i agree with charlie. i do think the kind of shock and awe, we will take on the entire world at one time, is not a strategic solution to this. i think the unfortunate thing is for a lot of these pacific countries that would have been part of the trans-pacific partnership, the unintended consequences is driving them into china's trade orbit, giving them more reinforcement. we could have been setting the rules of the road and now china is. i think that's just incredibly unfortunate. neil: this is where we are. gary, one thing i was interested in is your take on how the chinese respond, because they promised to retaliate. now, the thinking was prior to this, they are going to blink first because they need a deal more than we need a deal. i'm wondering if that's the

case. what do you think of that? >> when you go the a horse track, you bet on past performance. the past performance of the chinese is they are not giving in in any way, shape or form and are now talking in a more threatening manner. i don't think anything gets done. my biggest question, can weder free world changing his stance? we came out of the last more tariffs, and out of nowhere, we are back to tariffs again and you have seen how the markets reacted in a matter of a day. i mentioned apple which was only one stock, $65 billion. we are talking maybe a trillion or two have been lost in one day, and -- neil: yeah, but a lot has been gained prior. >> i'm not arguing with that point. >> building on that uncertainty theme, i think it's also destructive we are starting to use tariffs not only to accomplish trade goals but to accomplish -- >> everything. >> -- policy goals. this is being used aall-purpose tool.

neil: immigration. >> trade war could go great and all of a sudden, i think this is something you will see certainly with democratic administrations going forward. >> the real question is how much does this trade stuff which is negative for gdp and corporate earnings, how much does that sort of hurt compared to how much does the tax cuts help. we really don't know yet. but he is playing with fire. he's going into election year, suppose this is worse than the tax cuts can't make up for thchthis. >> and deregulation. >> that is a real problem for him if he has a slowdown, gdp slows down 1.5. neil: gary cohn saying this will take away the benefit of the tax cuts. >> boy, these democrats are missing an opportunity. if you listen in the debates -- neil: you must stay for our next segment. the democrats hoping to seize on this in a good way, they could be botching it. whether you are red or blue, you might want to pay attention to

how each party is trying to say you will get more green. see what i did there? basic cable. for you, america. you're welcome.

i was watching the so-called debate last night and i also watched the night before, that was long, long television, and the democrats spent more time attacking barack obama than they did attacking me practically. neil: all right. welcome back, everybody. i'm neil cavuto. continuing our discussion about the political impact of everything you see going on here. i believe kamala harris is about the only prominent democratic candidate who has mentioned this trade fight, prompting not only the federal reserve to lower rates but maybe questioning the durability of this economic

recovery. but all the others, all 700 others have not really pounced on this as an issue. i'm not giving tips one way or the other but it does seem odd here. anyway, back with gary, jillian and charlie. gary, that is odd. if you wanted to seize on something, this is something you can seize on. >> for me, i thought it was like tigers eating their young while i was watching these debates. immigration, obama deported too many people, health care, he didn't do health care for all and we are hearing nothing on trade, which could have serious repercussions. not 100% sure, but i just think, i do believe the left does like us fighting china. we have heard that from schumer and others. i think they're not really on it just yet but i will promise you, if markets swoon because of this, they will start getting on it because every thousand points in the dow will matter as we get towards the election. neil: that is assuming we have

points on the dow. what do you think? >> they are on their weakest ground at least right now attacking the trump economy. they are on the strongest ground attacking his mannerisms and some other stuff. you know, the problem that the democrats have is as crazy as trump is and callous in his demeanor, from a policy standpoint, take trade out of it, just overall economics, look at kamala harris's policy for medicare for all. she's proposing a transaction tax. she's not saying okay, jamie dimon, you run jpmorgan -- neil: wall street. >> yeah. that means average joes that want to trade stocks, pension funds, public pension funds that have to trade, which they do, mutual funds which have to trade, which they do, the average guy gets exposed to this tax. it's so stupid. i think even -- neil: are you not for kamala harris? >> i'm not for everyone. forget about that was like watching dogs return to their own vomit. neil: is that really necessary?

let me ask this. the one thing that's been going for the president is the strong economy and obviously what's going on in the markets. lot of people can say don't give him the credit, democrats say it goes back the barack obama. i don't care if you are president, things turn south, they are going to blame you so might as well give you credit when things go well. having said that, trade issues that could linger, the president has got to hope that the fed keeps cutting rates, right, to keep this going. >> yeah. that's the bet the fed will bail him out of the poor choices he's made. i don't think the democrats can attack him on this for a couple reasons. if you watched the first doe ba debate, there is consensus on china and its bad behavior. second of all, all the guys on the left want to protect union and address trade as a protectionist thing and it will be hard to go back and say you give us all this political money but we want to have a more liberal free market trade structure than donald trump. then on top of that, you know, i

just think democrats are in a weak position because they argue the trade war is scary, what's scarier than a trade war than a government takeover of broad swaths of the economy. neil: you agree with each other. >> what's happening? i am shattered. neil: you know, gary, i'm wondering, today notwithstanding, down about 257 points here, this will certainly be as things stand now, the worst week for the markets of the year, but it's been a good year still, and we have seen virtually every sector run along with the ride. do you see anything here that's different before? you could have talked about the downdraft last december, the one we experienced in march where if you doubted this, you regretted it because markets came back, suddenly we were proven wrong. that doesn't mean a deal materialized but that people overreacted. do you think that could be

happening here? >> well, first off, it's not been a good year. it's been a great year so far. neil: i correct you. you don't correct me. >> look, anything can pop out of anywhere. earnings have not been magnificent. they have been kind of okay. neil: they have only been 2.5% year over year. >> that's not so great. the biggest issue for me is what's happening around the globe. foreign markets and foreign economies are heading south, and we always talk about how things are so interconnected, and i can promise you if we join in on that, that is going to affect the election next year. but i must tell you, if the economy stays sound, if the market stays sound, trump can write bumper stickers from now until new year's about how we let you keep more of your money and they're taking more money and i must tell you, some of the left talk is about as irrational and illogical as can be, as

charlie said, a transaction tax, that's not getting wall street. that's getting aunt mary and uncle bob. that's a tax on every person who does anything in mutual funds or pension funds, you name it. all costs would go up. that's going to have a huge impact. i think trump will be able to fight that. >> i agree. you know, like i said, the trade stuff is really bad and we don't know, again, we don't know just how much it's negative compared to how much positive stuff but if it's kind of where it is now, the crazy economic -- i tell you, that was a real bizarre show. it was funny, because kimberly strassel made this point in the "journal" today. the moderates were really, really liberal. they just seemed moderate because the other guys were so off the charts. >> we've got obama's record now being litigated. >> obama was a super progressive but he looks conservative. >> it's crazy.

neil: thank you all very, very much. some but continlletins are comi concerning china, what they might or might not do. the ambassador saying the u.s. wants to talk on trade, then we will talk. if they want to fight, we will fight. goes on to say tariffs are an irrationally irresponsible act and beijing will take whatever necessary countermeasures to protect our fundamental rights. hong kong protests are really turning out to be chaotic and violent and should no longer allow them to continue this reprehensible behavior. it's that last one that is causing the greatest concern, that china is now saying after eight weeks of this stuff, this stuff stops. more after this. you wouldn't accept an incomplete job

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neil: it is trade, trade, trade, despite a good employment report. it is concern that tension between ourselves and the

chinese is going to escalate. i told you things are getting increasingly bellicose, at least in the language both sides are using, with the chinese promising a response and that they will do countermeasures to protect what they call their fundamental right, not delineating what that might be. also talking about the ongoing protests in hong kong and that, you know, there's got to be an end to this and they should no longer allow, that is these protesters in hong kong, to quote, continue this reprehensible behavior. don't know what that means but it certainly sounds tony soprano-ish. deirdre bolton is with us. deirdre: if you look at the groups that are really weighing down the market, they are trade related. tech, materials, industrials, they are all falling. if you look at the dow in and of itself, apple, goldman sachs, visa, 3m, caterpillar, they are accounting for about half of the dow's losses right now.

the only two groups that are holding up right this second are defensive ones, utilities and real estate, neither of these two of course dealing with direct investment from overseas. retail we have been talking about, down day two. american retail industry leaders saying the u.s. consumers, reminding us that they will be the ones paying for the tariffs literally much more than chinese manufacturers. in fact, by some estimates, chinese manufacturers produce as much as 42% of the clothes that we wear, 69% of our footwear. i want to talk about some standout story stocks, if you don't mind, which are separate from this context of trade. if you look at pinterest, the standout on the upside, up around 20% right now. 18% right now. digital pinning site going public this year, getting analyst attention. deutsche bank raising its guidance, moving from a hold to a buy, saying the site scaling

its business successfully and quickly in the u.s. and overseas. opposite move for squared, down more than 15%, suffering from a downgrade. a lot of competition including apple's new card coming online this august. neil: very thorough as always. appreciate it. deirdre bolton. the dow down about 249 points. every sector save the utility sector down right now. the utilities, not by much. if you are looking for a conservative place to store a lot of cash, if you are nervous, that's where you go. it could explain why bonds are doing well. you don't get a lot of bang for your buck but you keep your buck. more after this.

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neil: all right. the president is due shortly to sign a measure on eu trade. talk about that, we are so focused on china, we forget stuff going on with the rest of the world. fortunately, edward lawrence does not. he's at the white house right now. reporter: the signing ceremony, talking about the european union, it's an agreement with the european union over specifically hormone-free beef and what this allows the u.s. farmers to do is ship more hormone-free beef to the european union. now, a senior european union official says this shows the cooperation between the eu and the u.s., establishing a positive bilateral trade agenda there. white house economic adviser larry kudlow talked about this briefly this morning.

>> america has great beef. reporter: what this signing does, it gives the president a victory on a partial trade deal with the european union. it allows u.s. ranchers to start being competitive in hormone-free beef in europe. it gives the u.s. a share of exports in the marketplace. and it resolves long-standing issues with the european union. now, the administration is in the middle of negotiating a larger trade deal with the european union. at the moment that larger deal is at a stalemate. the european union does not want to negotiate over a greater agriculture deal. the u.s. wants to put agriculture into any deal that it makes with the european union. the president has until november to decide if he's going to use auto tariffs as something to get the european union to come to the table here. we haven't talked about auto tariffs much over the past couple of months but again, that's still on the table here. but this could be a first step

to possibly moving that greater deal with the european union along. back to you. neil: thank you, my friend, very much. edward lawrence at the white house. now to vincent reinhard, former federal reserve economist. that skill set comes in very handy right now. vincent, thank you for joining us. >> thanks for having me. neil: let me ask you a little bit about the growing market expectations that no matter what jerome powell said the other day, almost indicating the quarter point cut was going to be it, that they're expecting and actually placing odds on the possibility of another cut in september, still another one six weeks after that. obviously, the trade situation maybe has bid that up a little bit. is that what you think? >> that's clearly what markets are pricing. that's the problem when you feed the beast, it just wants more. i think this is outsized. one way to think about it is there's a fundamental inconsistency in market prices

right now. if you look at say the fed funds futures contract for december, it's pricing in almost 75 basis points of additional ease. 100 basis point cut in under six months is not buying insurance, that's a panicked response to recession. if that's the case, then why are equity prices so high and credit spreads so narrow? i'm kind of of the view that the risk on is appropriate, it's the expectation about the fed that's inappropriate. neil: you know, i like what you said there about the markets potentially leading the way. i always worry about that, because it almost makes the federal reserve look like it could potentially be doing the market's bidding. we have learned from the markets in the past, as prescient as they are, they are not necessarily -- >> market's a great resource, don't get me wrong, but market swings are way outsized relative to how the macro economy

perfor think that's just always the case. the basic problem jay powell has was last year, he was leading the market. he was saying this is what we will be doing with rates. and the problem when you are leading the pack is you are an easy target. complaints from market participants and perhaps from the white house. so from december to january, he moved from being in the front of the pack to behind the pack, following markets. what's happened in 2019 is the packs got way ahead of him. because of just sentiment and enthusiasm there. and he's running to catch up. at some point, he's going to have to show some leadership and say gee, this just is not appropriate. he tried to do it on wednesday but it's a tough job. neil: yeah.

boy, is it good having you. thank you very, very much. >> thanks for having me. neil: meantime, let's take a look at oil. after the rundown, bit of a runup here, we will see whether yesterday's more active barometer what's going on in the energy market, or today. we got jeff flock and phil flynn, two of the smartest guys i know. how's it looking, jeff? >> we have got so much roiling this market, neil. we are up about 3% right, phil, and i got five topics for you. i want one sentence on each one. oversupply. >> not true. here in the united states, supplies are at the average range. we are not oversupplied. >> fed rate cut. >> fed rate cut is bullish for oil, long term. even though the market was shaken up they didn't cut more, it's bullish. >> china tariffs. >> china tariffs haven't happened yet. why are we reacting so negatively? >> iran tankers? >> you know what, right now, that's oil that's being stored. china is going to use it as a threat but it's the nuclear option because if they touch

that oil, it will be more than sanctions. it will be international banking restrictions. >> lastly, north korea. >> north korea, they are crazy over there. that guy's crazy over there. but north korea, i think donald trump is trying to deal with -- he's like hey, this guy is out of touch with reality so i'm not going to react like i would with a normal leader. >> okay. that is your update on oil. 45 seconds. neil: that's very impressive. very, very impressive. >> he can do it. neil: take your act on the road, gentlemen. thank you very, very much. we are following a couple other things, including the sectors that get hit on trade. you know, when things calm down, these are the stocks that run up. when things get a little dicey like they are now, these are the stocks and sectors that run down. after this. at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond.

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neil: all right. you know, when you talk about all the sectors that are exposed to whatever happens in china or slowdown and they go tit for tat with us, probably the biggest area would be in the technology arena, particularly semiconductor stocks. who knows that better than brent larson, following the selloff in chip makers. that's a big area because they make a lot of stuff there. >> and they bring a lot of stuff, we send a lot of stuff over there, too. when you think about chips, we just had the nvidia, we are talking about gaming consoles, smartphones, computers, laptops, equipment that goes into your home, any smart device you have, wifi routers. there is stuff everywhere that has these chips in them. it's a huge industry. as we saw yesterday moments after the tweet about more tariffs, a lot of these companies saw a lot of value go away. apple being one of them. they lost several dollars on their stock. intel in the same position. what's interesting about that is intel was just starting to do a little bit better.

they sold, there was rumors they're selling their 5g division over to apple. neil: paying a lot of cash. >> lot of cash for that. now they are all hurting today. neil: people tell you they think it's overdone or that this time, maybe the fact the president added these other tariffs effectively on all chinese goods, and that china can't help but not respond, all bets are off. >> yeah. you know, at one point, we heard there was going to be maybe a carve-out, electronics manufacturers. most of them are based here. neil: apple itself. >> by the way, the iphone is not going to become $7500. i heard that question being thrown around today. neil: $7400, right? >> $7450. but you know, apple has fared okay so far in the ongoing trade war because they have had a bit of a carve-out. a lot of the manufacturers, one

in particular has said we'll just move our stuff to vietnam and just have our stuff made in vietnam which is bad for china, because then they are going to lose -- neil: this is one of the reasons you hear china doesn't blink. a lot of these companies are doing just that and that will go beyond whatever trade accord they have with us. >> exactly. i know we want to bring these manufacturing jobs back to the united states but a lot of the stuff that is being manufactured can't be manufactured in the united states. the smartphones that are being made in china, these are not necessarily things that are made by hand. they are made by some very precision robots that require a lot of work and a little input from people over long periods of time. neil: there are no instant either american alternatives or american manufacturing alternatives. >> there wouldn't be one that could be ready to go as quickly as we would want it. it would be -- i know apple just

recently moved the production of their mac pro. it was being made in texas. they are now going to be making that in china. but given the current situation, they may decide against that and may say we should probably start doing it back here. neil: what's the one computer they have that's like $10,000? >> mac pro. about as much as a honda civic. neil: that thing better make my breakfast. >> the sad thing is, it's not going to make your breakfast. neil: that's it. i'm outta here. >> maybe it will be a little faster. neil: great job, my friend. brett larson. we are waiting to hear from the president at the white house. he's going to talk about this eu trade deal. there, we are making amends. with china, not so much. stay with us. ♪

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neil: all right. waiting to hear from the president right now. this as he discusses trade with eu, much more promises on that front than it is with china, where things are getting nasty

and already the chinese are responding in kind, promising retaliation. all of this at a time when the middle class might not be prepared for a lot of things that could happen, including the inability to pay their own debt, let alone the accumulating debts the country is facing. in fact, there's a study out that shows middle class families are falling deeper into debt just to stay in the middle class. back with us, charlie gasparino, jillian melchiore, gary kaltbaum. >> before we get started, you know, i hard a commentator say you have an issue with trump. you have been obsessing about the deficit lately. you have been very kind of nasty lately. neil: i have not been nasty. >> i brought you a present befitting your attitude lately. it's dr. evil. neil: wow. [ inaudible ].

>> i say keep obsessing. >> gary, he's getting -- it's getting late. someone spiked his pumpkin lattes. >> he's got something going with trump, too. i don't know what it is. he's got to settle it. neil: you were saying, gary? >> the number one crisis in this country is our debt and deficit. they are going to come home to roost one day. i don't know what date, but it is going to happen. i can promise you. neil: charlie will say you have been saying that forever. >> that's fine. that's fine. >> he's got to get over this trump thing. don't you think, gary? >> no. neil: dig in deeper. jillian, that's one of the things i don't understand.

>> i'm just wondering on the rade stuff escalating, the the timing of the cut -- not the cut, the timing of these remark china, came right after the cut. would that have happened if we didn't get the cut? >> well, i mean, that's kind of the question, right? neil: i asked it. >> i answer the questions. no, i think with many of these trade things, it's uncertain. it's really difficult to predict. i think that's part of what's so economically disruptive about it. [ speaking simultaneously ] neil: it's going to cost more, the debt argument is out there, they are accumulating debt just on their own. this doesn't help matters any, the stuff they buy every day is going to go up. >> i agree. by the way, what does 25 basis points do? >> nothing. neil: it's stasis. you think there's more to come? >> no. i don't think it would matter. neil: why do you seem perturbed

by the question? >> i don't think it matters. i think we are pushing on this because you understand there's a difference between monetary policy and fiscal policy. neil: you have talked down to me for ages. >> gary, explain this to neil. in monetary policy, we already have pretty low interest rates. you sometimes push on a string when you lower interest rates this much and you create financial incentives to do stupid things, right gary? >> that's what's been going on for the last ten years, charlie. neil: the expectation is now that people are placing bets on this, you can wager it, feds funds futures contract, quarter point cut, additional one next month, quarter point cut six weeks after that. you buy that? >> hundred percent certainty. i will tell you this, neil. if the market drops another 500 to 1,000 the next week or two, he will do one before the next meeting. the fed has been addressing markets, not the economy, since december. remember, market bottomed when they floated the rumor that they

went from raising rates to patience and the market bottomed again when they went from patience to lowering rates. there's a method to the madness and it's all about markets. that's the expectation. neil: let me ask you this. by far the youngest person here. that's not saying a lot, because we are like months from death. >> gee whiz. neil: here's the thing. people your age and even younger are thinking you know what, i'm not taking any chances, i might not be buying stuff, you are shrinking back from retail stores which is why some of them have been hurting lately. this goes beyond china. this is bad timing, then, for this kind of stuff. >> yeah. if you looked at the "wall street journal" story on middle class debt, some of it was really alarming. you're looking at young people who are, you know, borrowing the equivalent of half of their income to buy a car. neil: really? that doesn't give me much faith in your generation. >> i have been saying this for years. >> college debt is really piling

up. we are getting degrees that don't andy up amouend up amount anything. honestly, based on many of these things, we are coming out of a bad fiscal situation. this is the first boom we have seen -- neil: but it's been a big boom period, right? unemployment is about the lowest -- >> but marrying it with the interest rates, it's going to make things complicated. >> it is. >> think about it, the fed is incentivizing your generation to do fiscally stupid things, to borrow and make up the difference. right? >> i do think you have almost this trauma from the financial crisis where young people are being a little bit more cautious. neil: a lot of them saw their parents burnt and don't want to be burnt themselves. >> you have the people who are already so far in debt with their college degrees, they are just trying to keep up, borrowing more and getting themselves in a hole. i do think you have this other swath of millenials that's really cautious about it that doesn't want to repeat the same mistakes. they are many of the ones that are buying houses, that aren't having children, are trying to get on a little more stable

financial footing. they come under attack for it but i'm not sure that's a terrible idea. neil: it's unjustified. it's people like him. >> needle people. >> people like you. neil: yes. >> we would talk about the markets. neil: gary, thank you. jillian, thank you. gaspo. >> yeah. neil: waiting to hear from the president of the united states. he will be talking trade and eu, where we have a much more constructive thing going on than we certainly do with the chinese. more after this. let me ask you something. can the past help you write the future? can you feel calm in the eye of a storm? can you do more with less? can you raise the bar while reducing your footprint? for our 100 years we've been answering the questions of today to meet the energy needs of tomorrow.

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cash. utility as good place to park cash. bond, a good place to park cash. stocks, not to so much. here is charles payne. charles: neil, you have gold bricks buried behind 9 house. neil: you know but they're fake. charles: i'm charles payne. this is "making money." president trump is about to speak about the trade deal. markets still sinking after today's jobs report. not anything to do with that president trump to promising to plant more tariffs on. president is renewing concerns about es indicated trade war between china and america. we have got one of the biggest backers of tariffs, the man himself, peter navar