here is what we got. the jay powell statement, presidential tweets on china trade. he leaves this afternoon for the g7. we're waiting for the other shoe to drop. what will we say this afternoon. time's up for me. connell mcshane, it's yours. connell: what a friday, stuart, what a friday. it is not over yet. we wait for more news to come. welcome to "cavuto: coast to coast." i'm connell mcshane filling in once again for neil. we have a selloff in wall street, as president trump lashes out at twitter and china, the fed chairman who he appointed fed chairman. hillary vaughn live at the white house today. hillary? reporter: connell, president trump promising to respond to china's retaliatory tariffs this afternoon. we don't know if that is reaction from the president, or include some action from the president in response to this we do have new reaction from him on twitter though. in a flurry of tweets in the last hour, the u.s. stupidly

lost trillions of dollars to china. we don't need china. we would be far better off without them. president blasting the country for stealing from the u.s. for decades. he is now ordering companies to do business somewhere else. the president tweeting this. our great american companies are hereby ordered to immediate start looking for an alternative to china. the president continuing his crackdown on china over illegal fentanyl being funneled into the u.s. ordering companies like fedex, ups, amazon, and the u.s. postal service to root out illegal fentanyl being sent through their services. trump saying this, they need to search for and refuse any fentanyl delivers. the president also said president xi of china promised to stop the drug flow but did not follow through on that. so, while president trump continues to unload on china he is also promising retribution for the retaliatory tariffs. but his tray advisor, peter

navarro struck a different tune on fox business earlier today saying that despite china's retaliatory tariffs they are still set to restart trade talks in september with the chinese trade delegation. connell? connell: hillary vaughn live at white house for us. u.s. chamber of commerce china center director, jeremy water man. this all, after the speech from jay powell, the fed chairman earlier today in jackson hole, the president lashed out at him, saying only question who is bigger enemy, jay powell or the president of china, xi xinping? your reaction what happened so far on a friday? >> first of all, thank you for having me and you know, certainly a fast-moving day, an evolving story. in our view the enemy is instability, is uncertainty. so, you know, we have taken note in recent days of the, of some of the discussions at a senior

staff level that have been going on between the two governments. certainly have been hoping that the two sides would sit back down at the table next month in ernest. connell: right. >> obviously today's action by china was i think not unexpected, given the tariffs that, that are due to be imposed on them come september 1st, certainly unfortunate. it is fueling greater uncertainty. we're deeply concerned. this is a dangerous tit-for-tat cycle we're now in. connell: what about the president's response with the tweet? who knows, maybe this afternoon we'll get more clarity what the policy response is. when he said things like he said on twitter today, hereby ordering companies to start looking for alternative to china, what does that say to you, someone worked so closely with many of these companies? >> i think is certainly indicates a little of frustration a high level of frustration, certainly we can understand that, we too, we at the u.s. chamber and the best

community have been frustrated with, with some of the policies that we've seen out of china, policies, practices on intellectual property, we share the president's frustration. we don't agree with the administration's tactics always. and so, you know, i think, with regard to any, any new measures, new policies that would dictate to private companies how they conduct business that is something we have to look at. connell: right. >> but, obviously -- connell: you look at, to know if it is even something the president could do? >> i think that's right. but i think we do share, we do share the administration's, president's frustration. we want to see a deal that addresses those issues that the president has tweeted aabout. connell: is that the prism, jeremy to look through now? is the president even looking for a deal? if you say things like, you know

what? we might be better off without them, them being china, is it looking for a trade deal that allows both countries to coexist, old mutually beneficial relationship that everybody used to talk about or is the president now making what people in china have been talking about for a while, the idea of decoupling, us staying in our own lane, china going the other way, is he making that the official policy now, if so, what wouldyour reaction be? >> we'll have to see. the president has been very consistent in terms of his level of concern about those policies, practices eminating from china. with regard to decoupling, we don't think that is an answer. american companies have been, the china market, in terms of an export market for our farmers and for manufacturer has been a very important market over the last decade. it has been, one of the fastest growing markets for u.s. exports there is sales by u.s. affiliates in china, which are really significant and

contribute to growth here at home, contribute to jobs here at home. so we don't think that's the answer. we think the answer is, an agreement that addresses the concerns. we hope, we support the president and the administration, ambassador lighthizer and their efforts to continue to place pressure on china for that agreement, to work with allies, to try to get that agreement. that's our view. we think that is most likely to create the stability, eliminate uncertainty, and, insure the continued expansion of the u.s. economy. connell: all right. >> because we've had a strong economy here. we want to continue to see that. connell: we heard, to some extent from jay powell today, which seems like a long time ago after those tweets. jeremy, thank you for your analysis today. jeremy waterman from the chamber our guest in the studio, good to see you. jeremy is talking about how they

want certainty, the companies he represents wants certainty. anything but today after that twitter rant from the president. money rushing into bonds and gold again. what is your view? >> this market is responding to uncertainty and escalation in the risk and outcome will be actually even worse than markets initially anticipated. connell: everything is looking for a deal. that is what jeremy is talking about. some sort of an agreement for both countries to go along. china making changes. u.s. agrees to enforce them. that is not what the president is hinting at. when you're ordering companies to look for alternatives. whether you can do that is legal debate, different debate. you speak that way, not looking for a deal, whole new paradigm, right? pardon to interpret until we hear something else this afternoon. what is the terp nation now? >> terp nation now if there is a deal, it is unlikely to be imminent. it is unlikely to be

uncomplicated. one of the fundamental assumptions was, perhaps things would not get much better but they wouldn't get much, much worse. the risk of things getting much worse has certainly increased. connell: the president went after powell again. what did he want? what was he looking for from the fed chairman in jackson hole i wonder? >> the fed is in a really difficult position. on one hand if you look at numbers of the u.s. economy it is doing quite well. the u.s. consumer showing strength. even though business confidence is sort of waning, output is quite subdued, the u.s. looks much better than rest of the world. that is one hand. on the other, a trade war is something that the fed hasn't had to deal with in a long time. connell: powell said that, powell said that in his speech. that was very interesting part of the speech, he said that trade policy uncertainty, how that fits into the framework. part of the speech he was going back in time. here is the eras we had in the federal reserve back in the

'40s. there was another era after that. there wasn't really an era that included this. you have to go back to smoot-hawley stuff. that was before we had to deal with central banking as it is right now, right? >> indeed. even smoot-hawley wasn't as interconnected as it is now. connell: true. >> 1025 -- tentacles of trade are between china and u.s., between europe and the u.s. that will be very hard to dismantle. impact that could have on consumption, business investment is very hard to predict, all, could be, should be, we don't know. i guess is a larger point right now. so, what kind of mind-set do you think investors should have at this stage? seems like today's trade, i'm not sure what to expect. i will sell off on risk assets now, figure it out over the weekend or whatever, right? >> i think the downside risk, one of the things we said u.s. economy at least is humming along. the major risk comes from escalating trade tensions.

now the risk seems to be crystallizing. the global economy slowing down much more significantly. connell: right. >> that too can cast a pall on the markets. connell: money coming into bonds, money coming out of stocks, we continue into this environment for the foreseeable future in your view? >> until, if you look at last several months what's happened is, we have sort of events like this. connell: yeah. >> negative news flow has been overwhelming. you had another week where things seem to be calming down. connell: of course. >> we may yet get that. i think with every sort of escalation, the calm down becomes less and less positive, because it becomes less and less certain. connell: final point what is your view on the so-called decoupling? maybe we have to find a better word, but the whole idea this might not get solved in trade deal, we're headed in two separate worlds u.s. in one, china in order, another new tech cold war, is that what it is. >> if it is, people's idea of the cold war is really the soviet union and united states

many years ago. connell: yeah. >> but again those economies were not as intertwined. connell: not even close in terms of numbers on trade. it is not even close economically. that was a totally different situation. do you think we're headed there now? >> you know, not decoupling quite but certainly, sort of decline in the integration that we've been seeing for about 50 years. connell: yeah. >> so that integration is not going to proceed. some at the margins, definitely we might see a little bit of decoupling even. >> what about better off without them comment from the president? >> u.s. trade as lot with china, invest as lot in china, dismantling all of that would not necessarily be positive. somebody would incur pain. connell: that's the pain, even if it is long term in the interest, decided upon by the governments, long-term interest by the government, doesn't come without pain. it takes a long time. good to see you. thank you very much. we'll stay on the story. you may have seen some tech stocks flashing up as we're

having a conversation. a lot of stocks, a lot of different sectors are down today, but technology, in particular, facebook, apple, all big ones have been declining. a lot of chip-makers getting hit. that speaks to a theme whether we're decoupling, china will start making own chips instead of relying on big american chip companies as it has for years and years. they are down a lot. advanced micro down 5%. nvidia down 5% plus. we'll stay on this, dig into it in further detail, maybe what you should be doing with your money. how much risk you should or should not take, that comes up after a big break on busy friday. more to come on the policy side, the president promises. we'll talk about that after a quick break. [ barking ] ♪

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connell:down 400 plus points on the dow jones industrial average here. even though a lot already happened on this friday more still expected as president trump has vowed to respond, we've seen whether that will be a policy response to the retaliatory tariffs put in place by china earlier today. so with that, we have reason to believe through a number of reports that the president is meeting right now with his trade team at the white house. gerri willis watching market action, reaction to everything going on from the new york stock exchange. gerri? reporter: connell, that's right, big reaction down here but it started with news before the open that china would tariff 75 billion of u.s. products. the real downside started after the president posted a series of inflammatory tweets that rattled eninvestors. the nasdaq has 2% loss. dow being led lower by trade sensitive stocks, apple,

caterpillar, 3m, intel. you can see apple a big move here, the worst, down nearly 4% as the president orders u.s. companies to start looking for alternatives to doing business in china, hard for apple. remember 20% of apple sales come from china. apple iphones are made in china. traders tell fox business, if apple shares fall below $200 it, will mark an important turn affecting sent month broadly negative. also in techland, tech stocks taking a big hit. philadelphia semiconductor index is down nearly 4%. now a wide range of u.s. goods are set to be affected by new tariffs, enconcluding autos, crude oil, beef, corn, wheat. auto stocks moving lower on the news especially american companies ford and gm. you see the breadth of the selloff going on right now. oil also getting hit, down about $1.70 a barrel. 1.59 a barrel, down almost 3%.

president trump says he will respond to tariffs later this afternoon. we'll have to wait to see what happens. everybody on the floor of this exchange is waiting and watching. connell? connell: the world is waiting to see what happens. you're right, gerri, that is how we live. with trade fears adding to volatile month of august, what should investors do as we wait to see what happens with all the wild swings? greg valliere joins us. that is pretty much how greg made hess career, talking about nutty events in washington and how to figure out how to interpret them. these are nutty times. i will ask you in a moment what we should expect next, let's tell us what should happen today? >> let's not sugarcoat it, i think today, august 23rd is a big time trade war. with today's developments, chinese retaliating, with

trump's comments, ordering u.s. companies to find alternatives to china. i think today chances after getting a deal this year have dropped dramatically. connell: i was bringing it up with our guests whether that is the goal. the trade team was meeting with his trade team, maybe they wrapped it up but he is meeting with his trade advisors, do you think that is the goal, a trade deal with china where companies in the u.s. can operate in china, vice versa, or president talking about it pretty openly now, not only should look for alternatives to china, many companies are already doing that, for bigger ones it is hard to do as we talked about over and over again but maybe we're better off without them the president suggested. what do you make of that? >> you have to wrap your head around a whole different narrative. i had thought like most people who analyze washington we would get a deal at some point before the u.s. election, which is still 15 months away. but i'm beginning to think that a deal is looking less likely. we may have to live with this

kind of anxiety for quite some time. obviously very unnerving for the markets. it creates a lot of winners and losers. the big winner clearly is fixed income. connell: boy, have we seen that with the yields pushed down, all money coming into bonds. can we long term, though, survive in a world, the answer is obviously yes we can survive. >> yeah. >> what does the world look like i guess is a better way to ask it, there are two universes with u.s. leading one, china isolated but obviously operating to the extent it can quite effectively in another? what, how long does it take to get there? what's the pain in between? what does that actually look like if that's where we're going? >> connell, we can live with this, as percentage of u.s. gdp a trade war with china, might affect 4, 5, 6% of our gdp. a trade war would affect the chinese economy far, far more. connell: yes. >> we can live with it, but i

would raise one crucial word, but that word is uncertainty. whether you're a farmer, whether you're a small business in the midwest, relying on component parts for what you manufacture, i think a lot of people are going to have uncertainty for quite some time to come -- connell: maybe it is not so crazy to suggest that we're better off quote without them long term? maybe that is the case long term or no? >> maybe, i would add this other point, connell, and that is for donald trump, if he escalate this is war, it makes it even more likely the fed has to keep cutting rates. connell: yeah. >> which of course is donald trump's major priority on monetary policy. i think after today, more rate cuts are now a certainty. connell: what was that though, by the way? what do you think the president expected from jay powell today? he said i will cut next time. didn't say it, but that is what the market interpreted it, he didn't set up a long string of rate cuts. president, oh, the fed did nothing. he questioned, actually

questioned, statement from an american president, which is what a tweet is i guess, he questioned whether jay powell, federal reserve chairman he appointed is a bigger enemy than xi xinping of china? what is going on? >> that was pretty extraordinary. i think that the president knows he is going to get more rate cuts. they weren't going to do anything today. this is speech by powell. connell: we all know that. the president prom bly does too. is -- presumably does too. was he looking for a scapegoat hear? what did he expect? >> i have no idea. the fomc has to vote, the great irony with all trumps tweets on fed, he had the most dovish fed chair of our lifetime he fired her. who i think would have been far more dovish than jerome powell. connell: greg, what happens this afternoon? you can stick with your previous statement which i have no idea. the president will have some sort of a response he says to china. i assume that is what the meeting is about at the white house. what might that next response

be? >> think it will be very strident. we head into a g7 meeting over the weekend with all of this tension. going back to the investment play, i can't imagine anyone is going to want to go home long stocks. i think people may want to go home long fixed income over what could be a very volatile weekend. connell: usually a play on a friday. we've been through similar fridays before. greg valliere, always great to see you. experienced analysis out of washington, putting wall street and washington together. oil at 53.69 today. it is selling off hard on china news. down by 3%. we'll talk about the g7 meeting that greg alluded to. also, would any kind of a deal make things more stable? we'll get into that when we come back after this break. be sure to catch us today more than ever. "after the bell," melissa joins me 4:00 p.m. eastern time. maybe we hear more from president trump and the response to china he has promised. we'll be right back. ♪

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connell: a little market or a little poll ticket into this market selloff we've been covering. the republican party at something of a crossroads over the issue of trade we've been talking about here throughout the show. the former governor of new jersey, republican governor christine todd whitman here in studio. governor, good to see you. this would not be old school republican type talk. that wouldn't be nothing new. president trump has been outside the box. coming out saying i hereby ordering companies looking to alternative it for companies from china, what do you think about a republican. >> i would question how republican he is. first of all they're private companies. you cannot order them the way to change business. there are things you can do to push them in that direction. i think he thinks is he anointed

one, the chosen one. what is troubling to me, we talked about before, tweets out policy change, dramatic change, then meets with his economic advisors. for stability, for some continuity, for some peeling for people to have this, this is thought out, there is some reason to this plan it, would be the other way around. connell: we're told more to come. there is more from the president, more policy response to china on the merits. republicans have always been the party that, for free trade. >> right, exactly not in favor of this kind, i mentioned earlier, saying would be mutually beneficial relationship with china. >> right. connell: now to be fair a lot of people a lot of others have changed their thinking on that. they don't view china way anymore. many of them agree at least with the president that something needed to be done about china? >> absolutely i agree with them. my husband saw it with his business. more intellectual property. then also subsidizing businesses, coming in and taking over american businesses when

they had made something successful in china. those are the kind of things. not a trade war that that encompasses everybody from farmers in the midwest to consumers in the east coast and west coast. nobody is sure about it. as you know markets and businesses need security. they need to have some understanding that this is sustainable or there is some policy here. insecurity is table -- terrible for planning. connell: we're seeing sell off in stocks, as greg valliere said, flooding into bonds. anytime this happens that is what investors do. from a policy perspective is all this worth it in the end? do you think it will be worth it in the end? to the president's point will be better off without china, will it work? >> how will you be better off without china? connell: that is what he said? >> i know what he said. we are a global economy. we should be looking at these

trade deals, i'm perfectly comfortable with that. connell: the argument i've heard we're better off, they wouldn't be stealing from us anymore. go in our own universe. find other countries to buy from. the supply chains will -- >> they're part of the chinese world too. we may say we'll not do anything with them. the rest of the world will not do that. china is too big of an economy to be totally isolated. connell: the problem with huawei. you isolate that company, other countries, europe is buying their stuff, right? >> exactly. we get left out. long term we will, it won't be helpful to us to try to do this isolation move on china. it is not going to happen. connell: governor, good to see you as always. christie todd whitman here in the studio. in a moment there is more on all this, how news related to china could affect talks. imagine being a fly on the wall there at the g7 summit coming up this weekend. we're down 460 on the dow.

we'll be right back. ♪ ♪♪

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connell: g7 leaders preparing for a summit this weekend. deirdre bolton joins us. i assume some of preparation would be reading president of the united states's twitter account, right? >> connell, we're seeing the effect those tweets are having on the market right now. we have to assume trade will be front and center t was always on the list of topics to talk about. now it becomes topic number one.

president trump upping the ante against china on trade this morning in that series of tweets. from a diplomatic standpoint i want to take that side note first. expectations are very low. france is a host country but the french president has abandoned this tradition of ending the summit with an agreement for the first time in history. so the first time ever basically saying there is not going to be communique. french president macron setting a deep crisis of democracy, deepening rift between heads of state from the seven largest economies in the world take a look at the market as we know, just going lower. you're looking right now at the g7 leaders. the other topickings that may be overshadowed but we'll go through them. wire e, brexit, income inequality, possible reinstatement of russia in the g7. relationship of the west with iran and universal taxation on

digital giants. one set of headlines i'm going to be watching for, europe using cheap technology gear made in china. wah way, zte. the trump administration has a different kind. they blacklisted from companies working or partnering with those companies. i'm curious to see if that is one more contentious topic thrown in there. newspapers i've been reading, some from france even, essentially, long story short, say anything short after disaster at this g7 may count as a victory. on that optimistic note, connell. book to you. connell: that is good. anything short of a disaster. thank you, deirdre. former assistant secretary of state for political military affairs joins us now, ambassador lincoln bloomfield. anything short after disaster, would you sign up for that at the weekend g7? what do you expect? >> connell, we need to wait and see. the president may show up to be very polite, low-key.

he already made his headline. this may be more aimed at xi xinping than the europeans. the europeans are nervous. they don't know what to expect. it could be fireworks t could be less fireworks. we'll have to see. connell: you bring up an interesting point about doing business with chinese companies, that is the u.s. blacklisted these companies. huawei is kind of a poster child for that. then other nations in the g7 continue to do business with those companies. anything you might see, we might see movement on that? do you think they're dug in there on that issue? >> i don't think you will see a lot of movement. go back to the 1997 asia financial crisis the europeans were far more exposed to the asian economy than the united states. they are closer. they do a lot more business in asia. that is a permanent condition. you know, even after the president pulled out of the trans-pacific partnership, the tpp, which would have set up sort of a u.s. team, a u.s. arrangement, left, kind of left the playing field for china to

make its own arrangements in the region. i think chinese economic relations have actually been increased in the last few years rather than decreased. so i don't see the europeans pulling out. connell: are they, i guess simple way of asking, would be are they just okay with spying going on? or do they not think it is going on? how does europe view this differently than the u.s., doing business with some of these companies, especially huawei? >> i believe that the fortune 500 ceos and european ceos and the u.s. government and many people on all sides of the spectrum agree china has been a bad actor. they have coerced companies to could have up their technology. they have taken, for example, japanese companies, said you can do business here but you have to build it here and give us your technology along the way. they have been doing this for a long time, it needs to stop. we all agree with that. how you do business with china is kind of a cultural issue, to embarass xi xinping in public, at a time he has a hong kong

crisis, we sold f-16s to taiwan, announced a major arms sale to taiwan, there are a few different provocations going on which make me wonder, a lot of experts wonder, will the chinese be seen to back down under very public provocation or will they simply, is their pride and nationalism morphon than the -- more important than the price they pay economically. connell: how much pain are they willing to take? how much pain can they take? everybody knows that the money is slowing. doesn't mean it is collapsing tomorrow. to your point they could hang in there a long period of time. when the president suggests that we might be better off without them, that companies should do everything they can to get out of china, we should, you know, kind of go on our own, let them go on their own, if you don't do it, you're getting at it earlier, if you don't do it with the rest of the world, similar to the tpp analogy. you know, we lose out there economically, right?

if the rest of the world still doing business with them, we stop, how does that look? >> i'm not, i'm not sure that's, that's what we will see. don't forget he threatened kim jong-un of north korea with fire and fury. ended up with a big summit with him in singapore and hanoi. in other words this could be a precursor to let's get together to have a big summit. connell: you're right. >> frankly we don't know. the business of supplying to shift supply chains gets to heart of import taxes or tariffs force people to do. they force them to build it somewhere else. they might build in america. the chinese might do the same thing. we had 24 billion-dollar export market in china five years ago. now it is kind of in trouble and i'm worried -- connell: that is an understatement. >> china is getting used to brazilian soybeans. we may lose that market. connell: i talked to farmers, many of them pointed out still support the president, have supported the president throughout this. they will say that you can snap your fingers, go back to the way

it was, right? >> you can't and so this is a high-wire act. i think he is looking at it the way he looks at business deals. which is they don't have a lot of financial runway. they have to cave in. i think what the advisors are telling the president. they can't last for too long. frankly in politics, geopolitics, yes they can. that is what i think we'll find out. connell: not over until its is over yogi would say in this situation. certainly not over now. the opposite. good to see you, ambassador. thanks for coming on today, important day given everything that's gone on today and more to come. burger king parent company has reaction to the trade uncertainty. we'll get that reaction with the dow down 430 points. when we come back.

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connell: president trump came out on twitter ordering, i here by order u.s. companies to look

at alternatives to china. he wants them out of china. how about a response pro-business? to talk about other issues which we'll get into, beyond a day like this, we have to ask any business person, what do we think of that type of talk from an american president? what is your response? >> we have a long-term view on china. we've been there since 2007 with the burger king brand. we recently started to open tim horton's restaurants there. recently announced a popeye's partnership to grow the brand there. the idea for us to be there for the long term. there will be ups and downs over the short period of time but our view, just like any other country, we're in about 100 plus countries, territories around the world. we're here for the long term. we're owners in the business. we want our brands to be most loved brands in all of these markets. connell: when the president is talking about looking for alternatives to china, probably referring to companies who make things there, having to make things elsewhere but for you, do you have any concern about

american brands, burger king, popeye's, for example, operating in that country? do you have any concern going forward or do you remain, if i asked you the question decade ago, you would have said i'm optimistic about taking that advantage for consumer? >> optimism we have great partners in all of our countries. chinese we do as well. we have amazing technology in those restaurants. our focus is very local, working with partners on the ground there, building with restaurant, connecting with the chinese consumer that will be the case. connell: working with partners that is another thing coming up, in other industries, but that relationship. chinese accused from stealing from american companies. we're saying okay, we're working well with our partners. what is going on? >> we have great relationship with our partners. tfi is our partner in china. they're a turkish group that has done business in china. we have strong partnership with turkey in china. with bk and popeye's in turkey,

and bk, popeye's soon to be in china. we feel very good about the partnership. connell: i said when i introduced you you were here to talk about other issues, one of these days where it is almost single issue day, it is interesting at burger king, so many stories on people looking for plant-based options and of course the beyond meat story has been all over the stock market for some time. now you have impossible foods. this impossible whopper, right. >> impossible whopper. connell: another company headed to the public markets, right? the expectation is so, so high after beyond meat. what does the future hold here? >> we're super excited about the launch of the impossible whopper. we say 100% whopper, 0% beef. very good reaction from consumers. our guests are coming to try. we have new guests haven't been to burger king in a while to try the sandwich. they like it. they're coming back for more. we have existing guests that want alternatives and differ

options. impossible burger gives them that option. we're excited about that. connell: i know the enthusiasm is there. barclay's put out a figure, market, plant-based is 800 million. over the next 10-year it can go to 140 billion. obviously that's a business opportunity. any concern, that it is too much too soon, people are getting a little ahead of themselves on this? >> it is hard to project what will happen to the industry. we feel strong about the work we do, talking to our consumers and guests, finding out what they want. we develop and work on products they're looking for. connell: yeah. this didn't come out of nowhere but really took off. is there a reason for that? >> we did some research over the last eight, 12 months. we felt there was a really nice opportunity. that hadn't been a lot of up take on the products but a lot of discussion taking place amongst consumers. we felt it was a good opportunity. we launched it in april as a april fool's joke in st. louis. it turned out to be pretty

serious. we're exciting, looking forward to continue to drive innovation as we have at burger king many years. connell: kidding, not kidding as it turns out. jose, thanks for coming in. jose cil. restaurant brands, burger king, popeye's tim horton. boeing has quite a distinction today. if the look look at the board is only stock of the dow 30 that is up. we'll be right back. from the couldn't be prouders

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connell: stocks are tumbling. oil down 3 1/2%. phil flynn joins us from in chicago. all market the looking twitter feed, jay powell speech all the rest, it is a friday too, which must play into it. give us a sense what the stock is on the floor?

>> it does. the floor a lot of them were blindsided by the activity. initially oil prices really got hit hard, to the levels they are a little bit higher on this, on the first reports that china would put this 5% tariff on oil. at first, of course the market had to react but when traders thought about it, it was like, wait a second, u.s. oil is probably 5% cheaper than the alternative. oil a fungible commodity anyway. even if they stop buying our oil, it would go somewhere else. jay powell talked and basically reminded me of butch cassidy of sundance line, there are no rules in a knife fight, no rules in a trade war. responding in this type of tweet market with policy if need be. after today, it may be needed. whether donald trump said hey,

we'll look for businesses coming out of china, the market backs down. that raised demand or recession fears. connell: we don't know if there that is some sort of a edict challenged in court. we could go down the road. we have no idea what the president intends. that is something as a trader. you have to take that into account hedging all sides of things because you have no clue what is next, right? >> absolutely. we had reports of one trader put on a $5.6 million bet the market would go up to 80 or down to 20. 5.6 million, that it will go either way. beth both ways. that might not be a bad bet. how this plays out, that will definitely have a major impact on oil. from a trader, the way we look, we're back to where we were almost, making new lows, we're right near where the first selloff was. the market may hold in here, find out what donald trump says later this afternoon. what he says could determine

whether oil prices come back up or continue to sell off. connell: i find that fascinating. as some people might say, that is a weird one. you're looking at a sports team you're betting they will win and they will lose. >> right. connell: what you're saying they are not betting on we'll have a slow, steady move one direction or the other. you say it will be a big move over a certain amount of time i guess no matters what happens? >> absolutely. yeah, he is basically betting by the end of the year, how this plays out is going to have major impact on oil. it could go either way. that is what the bet is. the way things look today. he might be. connell: he might be. anything on the president's response this afternoon? that goes to your earlier point, how do you prepare tore something like that, i will have a response for china this afternoon. what could that be? >> it could be anything. the bad would be he will come down hard on them. the market is going to freak out

initially, but then at the end of the day, none of this happened yet. you have to keep that in mind. connell: true. >> this could be prepositioning ahead of talks. connell: true. >> the market is getting cooler heads but always dangerous going into the weekend with this type of situation. there will be a lot of protective strategies going on into the weekend. not just oil. commodity markets are going crazy. soybeans, 5% tariffs, they're down 13 cents. gold is the not perfect safe haven, we're up $28 on gold. that has been in a big bull market, silver, platinum, all these things will make a big move later in the day based on what he says. connell: phil, have a good weekend i guess. >> you too. connell: we're awaiting that so-called response that the president has promised for china. there has been plenty on twitter. apparently more to come. down 457, 458 on the dow. more coverage as we continue. we'll be right back.

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connell: all right. china slapping back, that's kind of where we started, earlier today. then president trump reacting to that and his reaction which came on twitter, sinking stocks. there's a lot to digest. that's putting it mildly. we will try to cut through the clutter and lay it out in this hour. stocks are in negative territory now or getting close to negative territory for the week after the president responded to china tariffs by ordering u.s. companies, ordering u.s. companies to look for alternatives to china. that's where we are. down 485 on the dow as we bring in our panel. from the evening edit, one of my program favorites, elizabeth macdonald. the fox business network's senior correspondent, charlie gasparino alongside jackie deangelis. all fbn all-star panel. that tells you it's a serious day, e-mac.

we haven't even sat down for 30 seconds and we're down 500. what the heck. what's the big picture takeaway so far from this craziness? >> well, the president is angry that mr. powell didn't give more of an indication of a rate cut in september. after the next round of tariffs kick in on september 1st. so you know, here's the problem. the dollar is strengthening, that's hurting our manufacturers and exporters. the president wants a weaker dollar. powell's not ponying up. so the markets popped, powell was dovish and trump took it away with a tweet. connell: hold on a second. powell's not ponying up, but powell was dovish? i don't understand. >> powell was pretty dovish. connell: he was, right? >> basically in his remarks this morning, and that's when the stock market popped. the powell gains were wiped out after the trump tweet. connell: which was two parts. first started, he went after powell, who's the bigger enemy,

xi jinping or jay powell. but the larger one about all the stuff on china that came out after that. >> the administration's trade policy is idiotic. let's be real clear. jerome powell is not some sort of hero here. he screwed up. he was tightening in december, right, when the markets and the economy was clearly softening because of what? because of trade. connell: exactly. >> let me make this point. he's now trying to play catch-up. there is one place where they are not playing catch-up and that's in trade. i will say it again. donald trump, if he wants this thing to sort itself out, needs to fire peter navarro. he is an impediment to any sort of trade deal. he's destroying the markets. and by the way, peter navarro may cost donald trump the election. connell: he's doing the opposite of that as far as our understanding, meeting with him. >> absolutely. which is a problem. connell: the thing about powell that's interesting to me, charlie brings it up and he's right, in december, even now, if

you look the ahis speech today, i don't know that the federal reserve has pretty much said they don't know what to do with this situation because in his speech he went back through these eras of financial history, then said, i wrote it down, fitting the trade policies uncertainty into this framework, meaning what they dealt with in the past, is a new challenge. he basically said there's no playbook for this. >> it's unprecedented. i think that's what the markets are responding to. the market doesn't know what's going to happen either. the tweets keep coming out every day, there's a new, it's back and forth, back and forth. the thing the markets hate the most is uncertainty. that's all it's been saddled with. if the president wants to calm the stock market down, even more so than a rate cut, the trade situation needs to be resolved. connell: good luck with that. >> to jackie's point, it's really hard to use monetary policy to fix trade policy fallout. so the president now, we are

hearing "the washington post" reporting they are talking about a corporate tax cut to get more investment in the u.s., but the white house is now pushing on a string. we always talked about the federal reserve. now the white house is, because this trade fight should have been resolved this year, earlier in the year. connell: he wants -- the president wants to keep this thing going. he can't get enough cover from jay powell. maybe he gets it from taxes. >> there are a couple things going on here, including the fact i believe the president knows he screwed up a little on trade. he wants to blame it all on powell. but that is not washing. what's going on is this. it's really clear that the administration's fiscal policy is unclear. you literally have larry kudlow coming out saying we are going to cut taxes. you have president trump saying we are not. you have larry kudlow coming out, we are going to cut taxes. he's talking about cutting taxes when he can't unilaterally cut taxes. the democrats have to agree. and everybody knows, every wall street trader that you speak to, every top investor knows the one

impediment to the economy going forward right now is trade, not interest rates. connell: is the goal between the two countries, if you talk to people in china about this, they were already having this conversation about the so-called decoupling, they will start making their own chips and preparing for the world where the u.s. and china are not linked together. the president talked about that today. i don't know if ceos ignore that. do they have something they can do with that information? he's saying we're better off without them, companies need to find alternatives. forget about the idea of whether or not he can order them to do it. what do you do with that as a company? >> it's really difficult. it's easier said than done. in a perfect world they would be able to do that and all find new centers for manufacturing and changing supply chains. connell: it takes a long time. >> it doesn't happen overnight. unfortunately, the second round of tariffs is really the round that impacts the consumer the most. september 1st, december 15th, right around the corner. doesn't seem like we are making any strides. if anything, the fight is racheting up here. that's what the market is really concerned about.

then you have kudlow saying oh, you will see that tax cut down the line maybe before 2020, in some way -- connell: what about congress, though? >> if the administration doesn't know what it's doing, the markets will react like this. let's be real clear. i don't know what president trump did. he put a tweet out that said he ordered companies to do this? connell: a series of tweets. we can put them up again. >> let's just say you are the average investor and vanguard, fidelity, and you have to trade off macro economic policy. the president is ordering corporate america via a tweet to do something. you are sitting there saying oh, my god, he doesn't know what he's talking about. >> is this really happening. >> i don't think he can do this. theoretically he could put tariffs on, could pass a law -- how do you tell, like how do you tell apple you can't do business there other than through

punitive tariffs? it sounds insane. >> here's the problem. u.s. gdp growth is now flattening. we are going toward 2%. why? >> we are at 2%. >> why? because of flatlining business investment. so when you have a chill, a cloud over business investment, you have that kind of rhetoric coming out, you are sitting in a ceo chair, you will want to sit tight for a little bit. >> we are at 2%. the question is do we go to 1%. >> a little higher than 2%. a little higher than 2%. 2.1%. wait for me. wait, wait. connell: go ahead. make your point. >> next friday, we are going to get a revision on gdp and i think that's going to be a big wild card next friday, to see what's happening with q2 revisi revision. connell: seems like a long time from now but it's a good point. we are sitting around this table talking about the comments, as we do. investors look at it and markets look at it.

there's still plenty of political people that say you know what, we can take this. we go down a little in financial markets. people in the white house that are advising the president but also people outside the white house who say longer term we are better off taking on china even if it's quote, short term -- >> who says that other than peter navarro? connell: the president literally made that statement the other day. >> like i don't hear sophisticated economists and economic guys both on the left and the right saying that this approach is good. larry kudlow works for president trump. if larry kudlow was at cnbc right now, he would be saying this is kind of a haphazard way of conducting this policy. he would say that. connell: that's probably true. but what's kind of been interesting to me, i said this over and over again, but if you go to the midwest, like i was in iowa twice last year and both times as the trade war was starting and as it escalated, a number of people who were getting hit the hardest by it, farmers, would say you know what, something had to be done, china was ripping us off for years, i'm here for it.

i'm like you're losing money and they would say that's fine, long term this is still going to be -- so how does that all work itself out? >> my mother-in-law in queens says that, too. that doesn't mean it's good fiscal policy. just saying that. i'm just telling you, i look at the numbers. the numbers say this does not work. i don't care what some farmer says in the middle of nowhere. connell: they are the ones being directly hit by it. >> so they have no problem paying more but we have a country to run, and the country is losing out on this. we are losing economic growth and by the way, i'm not saying let's not isolate china. it's the approach. we got ought t of the trans-pac partnership which is a pretty dumb move. we could have had the whole world aligned against china instead of going after all these other countries that have modest sort of trade issues with us. instead we went after, instead of going after the one country focusing all our attention on the one bad actor, we went peter navarro on the world.

that's why he should be fired. connell: that's your answer. that's what i kept asking about, what do you say to people who say it's all going to work out in the end. know what i mean? >> we are waiting the see the mood go sour both on wall street and main street. here's the issue to charlie's point. it's a good one that he makes. i want to know what's going on in the negotiations itself. when congress comes back from recess, will they call hearings and say okay, tell us exactly what the sticking points are with china. you owe transparency to the american people about what is the deal you are trying to hammer out, what is the problem to settle this. we don't know what the problems are. >> that's an excellent point. connell: there hasn't been much opposition to this. >> why aren't we hearing what the hell is going on here? it's only the economy that could blow up. by the way, if you are really scared about a socialist like elizabeth warren burning the country, it's this. connell: there's not much political opposition to the president's trade policy, if you really think about it. there's not -- >> publicly. connell: that's what i'm talking about. we will take a quick break.

at session lows in the market. we will come back, there are a bunch of other issues to get into. we are waiting for more comments from the president. all the safe havens you normally look at have been doing well. gold is one of them, up almost $30. a 2% gain in gold. most of the other money that's rushing into assets is rushing into bonds. we will stay on top of that. here we go. quick break. catch us 4:00 p.m. "after the bell "wt when we break down how this ends for this week. we'll be right back. you wouldn't accept an incomplete job from anyone else. why accept it from your allergy pills? flonase sensimist. nothing stronger. nothing gentler. nothing lasts longer. flonase sensimist. 24 hour non-drowsy allergy relief

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♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. connell: all right. no clear sign of a rate cut next month or you know, any kind of series of rate cuts after that. some are trying to read into what jay powell said today and his attempts to sustain the economic expansion.

when i say some are trying to read in, clearly thement presi is one of those people. that's the backdrop for everything we're watching. let's go to edward lawrence in jackson hole. i thought you would be the lead story today, talking about jay powell's speech, but the president upended some of that. take us through what the chairman said. reporter: yeah. he has a way to do that. check out this backdrop i have in jackson hole. i will tell you president donald trump not liking what he heard from federal reserve president jerome powell. the president you have been talking about those tweets all day long. now, in the speech, powell did say that the fed would act as appropriate to sustain the economic expansion but powell's speech did not lay out a clear-cut path for deep rate cuts and that upset the president. powell's speech did lay out how the global shocks could cause the fed to act. the chairman specifically mentioning the economic slowdown in germany and china. he also talked about what's going on in hong kong as well as brexit. powell spends a lot of time in

the speech saying there's no precedent to integrate trade uncertainty into monetary policy. basically, he's saying they are in uncharted territory now for how this relates to factoring in rate cuts to what the fed's doing. former fed president for kansas city federal reserve tom hoenig says prolonged tariffs will start to affect and slow down the u.s. economy. >> well, it's a tax so it's going to -- it should slow the economy in and of itself. our tariffs and their tariffs affect demand for our goods as well, so it's -- it really has its effects. what you're hoping is that this is a short run phenomenon. reporter: powell outlines in the speech this is the 11th year of the economic expansion. he does say that business investment and manufacturing are slowing this year in the united states. he also points to the fact that wages are rising and consumers

are spending. he says that is what is driving our economy at the moment. part of the reason the spending is going on, prices have not increased. china has been absorbing through the stimulus and other ways some of the costs of the tariffs and consumers are not feeling that pinch as of right now. connell: seems like a long time ago the initial reaction to the powell speech was he pretty much gave the market almost the minimum that it expected, that he was ready to cut rates and it was after the president hammered him, then went after china, that we started selling off. we are down 500 points right now. from people you have been talking to, that's the interpretation, right? the fed chairman was ready to cut rates? reporter: exactly. at least at the september meeting. what we did not see in this speech was cutting rates past september. there was an opening of the door for a rate cut in september but no deep cut. yeah. the market seemed to really appreciate what the chairman was saying. it was sort of neutral, a neutral reaction. then the president started tweeting, that sent everything up in the air. we are waiting for those

comments, what the president is going to say as retaliation for the china tariffs. connell: yeah. we are all waiting for that. thank you, edward lawrence in jackson hole. to that point, when the president went after powell, this is kind of getting lost in all this, because of who's worse, him or xi jinping tweet that came after, he said the fed did nothing and he goes it's incredible that they would speak, meaning the fed, without checking with me first on what i'm going to do and what i'm going to announce later today. he wants cover from his federal reserve. >> he's clearly tweeting at his own risk. that's an understatement. he appointed jerome powell. now jerome powell is the enemy. he also said xi is an enemy. right? now he's trying to get a trade deal. here's the problem the president is dealing with. unlike any other capitalist, so-called capitalist economy, china, the chinese government sets its own exchange rate. china doesn't have to deal with a central bank. it's the government setting the exchange rate. the president has to deal with

the federal reserve. all presidents have had to deal with the federal reserve. and congress. so to charlie's point. you know, it's sort of like these tweets are not helping at all, at all. and for a long time, people have been saying take the phone away. connell: maybe today would have been -- >> you know, if i agree with the president on something, i really do think powell should go. to be honest with you -- connell: why? because he was behind the curve in december? >> i thought he was okay with that but i don't have the numbers in front of me. the fed should have some sort of disclosure and insight into what was going on in the economy and he clearly double barrel tightened in december. he was reducing the long end by raising rates on the long end by reducing the fed's portfolio, selling bonds they bought from the banks during the financial crisis so you are raising long term interest rates and raising short term interest rates. that was kind of a double whammy. it was a major miscalculation. i think when you screw up that

bad in business, you usually go. but remember, it's not just him here. we are talking about trade policy that's really at the heart of the slowdown. again, i would take it, listen, i would cut a deal. someone should go to trump, congress or somebody, say let's do a double deal. you get rid of navarro and we will replace powell. that might take the markets up dramatically. connell: who's going to, whose the "we"? >> it would be nice to get him out of there with navarro. like a double deal. i know it's not going to happen. connell: a lot of things are not going to happen. >> it would be nice to get rid of both of them. >> i actually think powell is in a little bit of a tough spot. i will be a little more sort of favorable to the position that he's in. because he's not supposed to issue this sort of magic pill because the president has gotten us into a massive trade pickle that he can't really get us out of at the moment. he needs to sort of look at the data and be patient and see what happens. >> he didn't see the data in

december. that's the problem. connell: they keep going back to the fact they didn't know how -- >> the market saw it. he didn't. connell: he said they really don't know how to deal with this situation, this massive trade pickle. >> that's another thing. okay. doesn't know how to deal with it. he shouldn't have to. but in december when the markets were clearly signaling slowdown, clearly, 2.1% growth, whatever it is now, the numbers were showing that, that they had, he still kept raising rates on both sides. you know, i'm telling you, he should go. connell: what about the idea, this is what the president brought up, that -- the real idea is we have to catch up with other countries, they have been going crazy in europe and cutting rates to zero or below and we have to have our rates low because of that. i guess the president used the word competitive. we have to compete with them. >> i don't think that the federal reserve has control of rates at all. we know that u.s. pension funds have been buying the long bond. we know, charlie has been

reporting $17 trillion in negative yielding debt in europe. people are naturally flooding in to our long bond investing. i'm not sure the fed even has control of the rates anymore. >> they can sell their portfolio bonds and move around but really, this is all about economic expectations, flight to quality. why do people put money here as opposed to italy, because they would rather have their money safe. that all affects interest rates and the price of the dollar, obviously. connell: we are about flat as a pancake, that yield curve. the two and ten-year note at least. almost dead even. >> i'm not sure it's even a signal anymore. connell: probably right. >> we are kind of the worst of weather forecasters in predicting. connell: weather forecasters are not horrible. they usually get the weather about right. >> we remember in 2005 the mortgage insurors saying there's a huge problem in housing and housing investment started to subtract from gdp in the fourth quarter of 2005.

then there was a recession two, three years later. we didn't know -- connell: the bond market knows better than economists know. >> it's either a credit bust, or interest rate hike that would trigger recession. we don't know what's percolating beneath this slowing down. >> the bond markets often call recessions. i remember the stock market was at all-time highs in late 2007 and the bond fell out obviously months later. but you were seeing stuff in bonds. you were seeing stuff in mortgage bonds. you were seeing -- there were signs that something was coming down the pike. that's what we have now. connell: stocks down near the lows, 530 to the downside. in a moment, long-term mortgage rates, something we have been getting into, near historic lows and what about housing? not a great number earlier today on that. new info when we return. there's a company that's talked to even more real people

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connell: checking rates a moment ago, new home sales came in this morning in the middle of everything else and there was a dramatic fall in july. you see it, down 12.8%. now, the previous month was revised a lot higher which kind of plays into this and should be flooded out. long term interest rates near historic lows on the 30-year, 3.55%. from bank rate senior economic analyst mark hamrich joins the panel right now with e-mac, charlie and jackie to talk through all this. numbers like this often get lost on days like this but what was the signal from housing that you read this morning? >> i think on the year over year basis is where we really want to look on both new and existing home sales. the rate of change there is in the low single digits. i think, though, when you are coming out of a conversation talking about monetary policy, this is a great demonstration of the limits of monetary policy, where we have mortgage rates at the lowest levels in about three

years and what's that really helping? refinancing. that's just a small segment of the american population, maybe about ten million americans who would seriously have a reason to look at refinancing right now. connell: the rest of the market should be stronger, if you think about it that way. you know? >> well, that's a good question. but the problem with the housing market really is lack of inventory, a continuous rise in home prices for the existing home sales segment and what is the good news with the new home sales portion, we are seeing a decline in median sales price, meaning the builders are finally understanding that they need to address the problems for the people who want to get into the market. so admittedly, they have plenty of pressures, the lack of available labor, the fact they have had increases in prices on raw materials, once again the tariffs come into play there. connell: charlie? >> charlie gasparino here. how are you?

>> good to see you. >> i'm not sure if you picked up the way connell said dramatic. it was very dramatic before. let me ask you this. you follow bond markets every now and then. is there anything in the bond markets that are signaling recession other than the flattening yield curve? something in mortgage bonds we're not paying attention to? right before 2007, that's when you had, you know, that's when -- late 2007 you did have warning signs in mortgage bond market. prices were starting to go down. they really went down a little later. but it was an issue in 2007. it kind of basically foreshadowed what's to come next. do we see any of that here? >> it plays into the gathering evidence of the many headwinds we see, charlie. we don't necessarily have to do the forensics when the dead body is laying right over here, right? to the extent that people want to look for a black swan, well, it's here. we know what it is. it's trade, it's a slowing global economy.

to the extent that i think what you are getting at, is it something systemic, i don't think that's necessarily the problem. if the macro economy were doing fine, we wouldn't even be having this conversation. connell: what you were bringing up earlier, looking at outside events and maybe mark is right, it's kind of simple. we know the event. it is here. we don't need something else to kind of shock us. >> it's interesting what he just said. it's usually a shock. >> so recession. >> maybe we in a slowdown -- connell: i didn't say that. >> slow-moving crackup that's unfolding before our eyes. i always wondered if the crackup is going to be a currency crisis. maybe china is the krenz situcu crisis. i'm not sure. i'm interested in housing investment and why there was such a bad number on housing today. i know the south, the region of the south is pulling it down, right? connell: take a regional look. >> i think that might have been

down something like 50% on the month. those numbers are volatile. weather can whip them around. they make for great headlines, double digit movement in one single month but we know we really shouldn't look at the monthly moves. connell: always good stuff from mark. thanks very much for coming on. always good to have you. in a moment, down 530 on the dow, a couple things. we have fresh protests in hong kong. we will get into that. and new responses to president trump from a couple big american companies, fed ex and ups. that's when we come back. ♪ limu emu & doug

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connell: more news breaking here. this from fed ex. remember the president this morning said fed ex, amazon, ups and the post office should search for and refuse all deliveries of fentanyl from china. the company responds, fed ex already has extensive security measures in place to prevent the use of our networking for illegal purposes. in other words, we are doing a lot on this. we follow the rules and regulations everywhere that we do business, long history of cooperation with the authorities. they say they supported the passage of the stop act and encouraged accelerated implementation and enforcement of provisions to protect the health and safety of the american people. ups, something similar, following all the applicable laws and regulatory requirements of the government and the countries we do business and that statement goes on from there. amazon, we haven't heard from, to my knowledge. who else was mentioned? the post office.

so that is part of what we're following. so, you know. from china or anywhere else. all right. down 500 on the dow. quick word on hong kong. that hasn't been mentioned at least on this show today. it certainly fits into the larger narrative of what's happening with the u.s. and china. from the independent womens for forum, claudia rosette joins us live. there she is, in hong kong. we have been following the protests almost on a day-to-day basis. i was there myself at the beginning. susan li has been reporting now for the last week or so on what's been happening there. in terms of the context of how that plays into the story today here in the u.s. is the back-and-forth between china and president trump, what would you say? it almost seems now as if president trump is waiting for things to get resolved there. what's happening in hong kong? >> well, they are probably not going to be resolved any time soon because hong kong wants democracy, and china isn't going

to give it. but what happened today which is amazing, the human chain for more than 20 miles across hong kong. calling for freedom now, thank you to america for supporting freedom and democracy. we want democracy. signs and just incredible creative energy and these incredibly brave people who are defying the world's most powerful tyranny in china. it's a problem for china because this kind of affront to that dictatorship is actually perilous for xi jinping, china's dictator. and it's unlikely that china will give in but it also looks unlikely that hong kong will back down. so we have a very interesting situation here. connell: those are amazing pictures, you saw all those people holding up their phones and creating this human chain which certainly makes a powerful visual statement. i think the other thing i take away from your comments is we are always looking at timetable

and the speculation last week was the chinese are assembling a paramilitary force on the border shenzhen. has any of that talk died down? does it look like this thing drags on status quo? >> people in hong kong are feeling more confident that china will not send -- resort to military force. i would be wary of concluding that. i wouldn't rule it out. i think china has a brutal record and really doesn't tolerate the kind of thing that's going on in hong kong. by the same token, the more support that hong kong gets from abroad, the better, especially from the united states, from britain, from europe, from all the places where china is saying don't you dare support hong kong. that's exactly why china is saying don't. this is what hong kong needs and it's what they're calling for, in fact, they are thanking americans, they are thanking, there are signs thanking the polish today for any support for

this. they are really reaching out to the outside world. it matters a lot to them. and what they're doing here is amazing. connell: charlie gasparino wants, i'm sorry, wants to make a point as well. >> i just want to ask claudia this. do you think if we were in the trans-pacific partnership, if we had a coalition that could essentially rally around and isolate china, that we would be more effective in putting pressure on them to maybe loosen up on hong kong, or to at least not pull a tiananmen square? >> i don't think so. i think actually, you would get more pressure to not rally around, you know, there would be possibly much more of a coalition looking simply to economic interests. what's happening with hong kong, the message here is that money isn't enough, freedom matters. which is a really basic american principle. it's what led to america being a great power.

i think this is something where individual nations have to decide will they stand with hong kong. >> that was my point. my point was if there was a coalition, maybe that would be more effective than individuals acting alone. >> i guess a coalition if you like that's dedicated to supporting hong kong, yes. the trans-pacific partnership, i don't think that would have worked out to supporting hong kong. connell: fair enough. go ahead. you can finish the thought. i'm sorry. >> yeah. i was just going to say, one of the important things here is that while trade is really important and free trade is a wonderful thing, there are values, things that are important to human beings that aren't measured directly in dollars. and freedom is one of them. in hong kong, people are willing to take a big hit right now in terms of money to stand up for freedom.

this is really a huge movement. there are millions of people here who want that. and are willing to get out there and risk -- take huge risks for it. that's an important message for the world. connell: right. the world's seeing it. we see it in realtime every day on television including that human chain we just showed that you spoke about. claudia rosett, independent womens forum. president trump is headed out to the g7, that will be over in france starting this weekend. i don't know what we can expect from that. you see the market down almost 500 on the dow. all the criticism the president leveled at these g7 leaders, whether that picks up again. remember last time it was canada, he walked out, there was no communiqe. this time they won't even bother. we will come back and talk about what if anything can be accomplished this weekend after a volatile session on wall street today. we'll be right back. i'm really into this car,

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connell: the foreign policy side of this market selloff is we are down 500 on the dow, the u.s. wading deeper into the trade war with china today with president trump's tweets earlier in the day and some sort of a policy response promised later in the day. president questioning whether president xi jinping may be our biggest enemy or whether or not our biggest enemy is the fed chairman he appointed, jay powell. that really happened earlier. former trump foreign policy adviser walid phares is our guest to talk about this weekend. all of these developments come ahead of the g7 meeting. how does what's happening now with the trade war with china fit into that context as the president talks to the g7 colleagues this weekend? >> well, depends on what the results will be before president trump goes to the g7 meeting. he intends according to his tweet of showing a lot of strength and our position in terms of negotiation. we know there is an escalation between china and the trump administration but we know at the same time that there is a determination on both sides to

get to a deal at one point in time but each one wants the advantages that they consider as a priority to them. there are other subjects at the g7 which also will be examined very closely. connell: of course. one of the things i find interesting on the trade front is many of these countries in the g7 are still doing business, not that we're not doing business, but are still doing business with china in terms of the relationship with huawei which has been blacklisted here in the united states. is there progress that the president can make to bring him around to his position which is to say hey, we should cut off all that kind of thing? >> the trump administration, in general has two fronts now with regard our partners across the atlantic. one is with china but we have not asked officially, i suppose those european governments to do exactly what we are doing, but the other front that would be raised as well is iran. we have withdrawn from the iran deal, yet european countries are not just doing business with iran, but they are putting

mechanisms in to protect that business with iran. i think the agenda is going to be pretty full at the meeting. connell: is there a way to leverage our relatively strong economy versus theirs to get anywhere on any of those issues? if so, how? >> it's a good point. actually, it's not the governments who are going to be influenced by the fact we have the strongest economy, it's their companies. the choice has always been over the past few months, do you want to trade with iran or with the united states in terms of the economy. the answer is very clear. with regard china, it's a different ball game. connell: it is a different ball game. always good to see you. thanks for coming on. guys, before we break, i understand we would love to be a fly in the wall at this g7 situation but at the end of the day, the president brought this up, maybe it doesn't matter much in the long run, he doesn't seem like he really wants to go. last time he left early. >> he will hang out with boris johnson. connell: that might be the most important meeting. who knows.

>> in kron is sayimacron is say deal. what's really lost i think on the media right now is we are going into a 2020 election, clearly the economy is in slowdown so the choice is going to be president trump with the slowdown or ballot box poison policies coming out of the 2020 democrats, rahm emanuel said that, harry reid, john delaney, economic fantasyland. connell: they are basically saying the democrats have a quote, opportunity here and they can blow it by going too far to the left. >> they are campaigning on raising taxes. by the way, their new analysis, watch this, if you were to -- if the government was to seize and confiscate all income just above $200,000 up, still couldn't pay for it. connell: we will come back and talk about that and also the other side of it from the president's point of view, whether tax cuts to deal with all this are still on the table. we'll be right back. you wouldn't accept an incomplete job from anyone else.

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we are developing again tax cuts 2.0. >> it seems the president took 2.0 off the table yesterday. >> well, he didn't. >> might we see more tax cuts before the election? >> before the election? yes. connell: that was yesterday. seems about three weeks ago. david asman with larry kudlow, the white house economic adviser saying tax cuts are on the table after the president had said both this week. back with our panel on that. so if you really believe as everyone seems to agree here that we are in slowdown mode, are tax cuts a cure to that and does it really matter because could you even get them through or talked about in a congress right now? >> that's right. yeah. congress would have to agree to it. it's interesting to see the administration float trial

balloons about tax cuts. any time there's some kind of rockiness going on behind the scenes. the question now is about credibility. are you just going out into the media and saying tax cuts when you don't have a backing of people in the white house? reports are coming in that there's dissension in the white house talking about tax cuts, what form would it take. so there's no coalesced group in the white house saying yeah, let's go to tax cuts. it's a great idea. we all love tax cuts. but there seems to be a lot of obstacles to it right now. connell: the credibility question is legit for the investment community. we have seen that this week a couple times when there's a leak out of the white house that doesn't come straight from the president's mouth and tell a reporter that x is going to happen, then the president comes out that afternoon and says y, that's a tough environment whether it's tax cuts or anything else. >> well, i have been saying that, you know, sorry about that. connell: there it is. >> i have been saying for awhile that i thought the tax cuts were off the table because, you know,

nancy pelosi would have to do it, would have to agree to it. now, i had this little debate with harold ford, jr., long-time democratic congressman, friend of fox business, and he thinks that it is possible if trump pushed a payroll tax cut, that the democrats might go along with it. connell: that goes to the president's comments -- >> payroll is a very regressive tax, everybody pays about the same rate and it's only on the first $150,000 -- connell: 130. >> 130, so it's very regressive. it hits poor people more than it hits everybody else. in percentage terms. connell: working class, because if you make under that mark. >> much more regressive than anything else. you pitch that to the democrats, he thinks that might get through. i still think the democrats could come back and say you blew your chance by giving a huge corporate tax cut. why are we going to add to the deficit. they can easily rationalize not giving him that. >> i think part of the problem is how much they are communicating. it's the same criticism of jay powell when he holds these press

conferences. sometimes the message isn't coming out the right way. all of this miscommunication, one person said this, then the president said that, then another official comes out and says no, it's still on the table, that is confusing to the stock market. that is one of the reasons you are seeing these drastic swings. connell: i think it's a larger question of how bad they think it is. you see the president coming out in public and saying what he says about the economy, "the washington post" on the front page this morning had this story that they had 20 some odd sources in saying that he's been briefed, the president, about this downturn is pretty serious and you got to do something about it. do they think things are worse than they are saying publicly? >> obviously they are worried, because the markets are generally, particularly the bond markets, they are usually pretty right with this stuff. i will say this, though. we voted for a president, we elected a president that is a unicorn, okay. we should be expecting this sort of haphazard -- that's part of his charm. it's part of his success, okay. so i mean, just realize, you almost have to roll with the punches with trump.

connell: that's for sure. >> you got a severe counterpuncher in nancy pelosi punching back hard. >> that's true. connell: haven't heard much from her this week. great panel. thanks for getting us through this crazy hour, all three of you. we will take a quick break. we are off the lows in the market. we were down 500 plus, now it's 465. lot of money into gold, lot of money into bonds. we will come back as we are still waiting, remember, for more from president trump. he has promised a response to china on tariffs to come out of the white house later today. imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money.

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i am back with melissa "after the bell." we'll see how things close. the dow is off the lows but still down, off 470 points in today's trading. a lot is happening already. a lot may still happen as the stay continues. here is charles payne. charles: you say how things may close up? is that freudian slip? connell: it may be. we can't on you to turn things around. charles: there will be a some cp effect. i'm charles payne. this is "making money." it already has been a wild day on wall street. stocks are plummeting after president trump sent a series of tweets. he took on initially fed chair jay powell but then the bombshell reaction on china announcing more tariffs with u.s. goods. the indecision from powell, we were trying to rally but the bottom fell out. we will talk about what happens to the economy and your portfolio as the trade war take as more sinister turn. hud secretary ben carson joins