welcome back to the kaiser report i'm asked as are time now to turn to chris whalen chris whalen author and banker i guess yeah hey welcome back i'm max has gone good thing cool you know you predicted trump when and now less than two years later he's he's won over the world basically he's got policies he's shaking things up he has turned over the chord table and you standing on top of that jump up on yes where because all these folks like and so-called liberal elite are very very upset like

a michael moore site because they've been revealed as war mongers yet the left or the worse really soros well all of them are quite amazing they they tend to be the left is quite authoritarian it's the end of the day well they have to be because as margaret thatcher said eventually run out of other people's money so you've got to put a gun to people all right so first let's talk trade war your thoughts on trump's trade war with china europe canada mexico chris domestic politics mostly he's playing to the base not only for this election coming up but for the inevitable run for a second term well markets are acting positively how's that playing well because it doesn't really matter it's marginal to us has a large trade relationship with the rest of the world but it it's going to end or day when we're no there and i think the change that will occur over the next few years the structural change as a result of this is going to be important of the us has been paying the freight

since world war two and then we had the cold war and we had to help everyone so the europeans never really stood on their own they have not had to spend money on defense why do you just cut letterman's have the air force plan just cut a nato in half well no i don't need to cut him off you need to make them rationalize it but what's the what's the point of it and that has to use well i mean if you're going nice to another countries territory that in the. what's the point of nato and that is that this function is worthless it's an extension of deal model that's correct what model well british imperialism followed by american president but they don't let me go to europe there i think they don't want to part of the world anymore they just want to eat my mind he left. you know the empire is gone but they have pretended that it's still there and look at trump and queen what a great picture point is you have this american president who still really doing the bidding of the british empire one hundred years after we took the ball you know i say that's obviously wrong you know the brits lost same pyar really at the end of

world war one and they became they had to realize they were broke because they are a parasitic society they don't really make stuff they're not a manufacturing society what do they have nothing british petroleum the city of london lloyds one of the great schemes of all time that's how they make money so now that they're with leaving be you know colony we don't think nothing they've got northern ireland they can beat up on the irish people the middleby about it they will sail down to falklands again now they won't be deploying power in the state it's a good job the falklands to go back to argentina they could if they wanted to i don't think anyone cares age is over but it's a transition and the world economy is going to change as well because if the u.s. says to the chinese no you can't steal our ip anymore no we're not going to allow you free access to the u.s. market unless you give us free access to u.s. china relationship is fundamentally changing is it to a stance a way that makes maturing the two biggest economies right to walk us through what

we'll see happening between these two countries over the next couple of years four years a lot of posturing a lot of. things now because trade is obviously changing with tech with the tariffs that are going up i mean that is fundamentally changing the cost will go up the chinese are trying to put tariffs on stuff they get from the u.s. but they don't get anything from the u.s. really so how do they do tit for tat i mean they can't there isn't a symmetry there they don't. they don't fit together well in terms of balance and the chinese also have dominated a lot of low and mid and manufacturing but not the high end stuff if the u.s. can still buy high and some of conductors from the taiwanese for example or the koreans how much is it going to matter the koreans will feel like out very quickly thank you ok so on the global trade front south china u.s. e.c. posturing but not a lot happening what about us and the e.u. anything at all it's more fun ok walk us through that well with the british leaving

with their modest but still significant resources the e.u. does it work max they just don't have the money to subsidize everybody especially the italians who are a festering and you know they do want debt forgiveness they do want to issue their own funny little currency which we printed like a lottery tickets so this is the end of this pretense called the e.u. which really came about because we didn't want europeans killing each other anymore . it was germany germany is abundance bankers on this bank is the euro and the arrow cyprian central bank is germany and the bunda spank and they can print lots of money and cover lots if they will the nine debt was high now it's low you know they are there under leverage as compared to the federal reserve bank of new york or the bank of japan the e.c.b. is relatively on leveraged no i don't i don't agree the germans and the french are paying for everything they've had a defacto union in fiscal year we're going to spend that balance it on the e.c.b. buy another five fifteen trillion euros and they will go to your determined banks

and the french banks and the dutch or all ultimately underpinning us one of the. bank itself the rumor is that it's a basket case that is going to explode going to go the way lehman brothers your thoughts a slow death painful dwindling death because of this is model that doesn't make sense anymore when the model well it was london based capital markets and investment banking with this time. a rump bank back in germany they don't have a banking business in germany so they have to figure out what they want to do with themselves same thing with citi i thought why don't we marry them this wonderful german american alliance but in both cases you have businesses that are big fund them selves off the markets they don't have core deposits they don't have stable funding the way a wells fargo has for example and so they have to figure out a way to be profitable and they haven't they've lost money for ten years right wells fargo's business model is something other than stealing money from clients i'm not aware of that money where the only answer own money. they have something

other than just a larceny you know it's basic banking a lot of the. same thing you know you wrote the book for it man now what do you say about the reports that before it will stop making cars and make only trucks and s.u.v.s walk us through this they're listening to the market the market wants s.u.v.s they're what hybrids they want things that look like could they came out of the avengers for something cars are really not popular and there are a number of makers like machetes audi that still haven't gotten the message strangely enough tesla one of my favorites but ford that's are strength and most of the trucks quote unquote to make a really cars. you don't take them off road you know don't take them fishing in maine what's up the car industry in america so that mean that would be involved in the trade war right i mean there. the u.s. exports a lot of cars but the u.s. has been on the losing end of that for a long time the you know how do they how does how does that rewrite itself or what can be what is the remedy the europeans export cars free of that and then they come

into the u.s. with no tariffs are people on the other hand if we want to export to europe we get screwed because we have to pay the vet and we have a tariff as well so how is a fear the reality is europeans can't have freer trade with the united states or couldn't afford it so it sounds like a good point there yes ok so you want to industry is going to support him one hundred percent they've been waiting for him for twenty years and that's his base marcy kaptur for example in ohio protectionist democrat she will be one hundred percent behind trump she's been waiting for this guy for decades ok well that's a lot of voters yes you mention the carolinas everyone in the rust belt booming in the town is that north carolina is blooming looking at the democrats today max i think trump gets reelected easily fake you could impeach him if he get reelected he sleeps right ok so twenty twentieth's odds on he's an odds on favorite i think so i mean he's from so far increased. employment numbers that's right this whole bit how does the wall street how do the capital markets view the meeting with trump putin

how do they see that i mean the reaction of media doesn't appear to be much of a nonevent but when you know you thought that it kind of reminds me of identity politics the media keeps trying to weave a connection between trader connection between you know putin and trump meeting an old dress of the markets shrug it off you know the markets are still feeding on the fed and that's slowly going away but there's a ransom rising so you know the ten year fifteen years are heading ten year highs and higher you're getting the rates are going up to two percent three percent on the us on this on this paper deposit rates are going up both through. years ago if you were a big business and you had cash balances they wouldn't give you the time of day j.p. morgan all right so jamie dimon is going to call you and say thank you max and he's going to pay you more plus for that money really really sort of that's how much it's changed so you get a two to three percent to the vig that a business will get from a bank compared to

a few years ago so they yield on the cash instruments is now higher than the dividends on the s. and p. five hundred yes ok that's the first time that's happened in a while as a lot happen in the curves already inverted a little bit now this morning to the buffett model of valuation you know you looking at yield and up a thing he that would suggest that the stocks are overvalued or people will take the money off the table that they made earlier this year and last year and stick it into bill's right exactly i mean that's what i had to write. to you out of people to take portfolio a lot of people are doing this then you have a rotation out equity out of stocks yes now i think yes and the only thing that is holding it up frankly is buybacks there's a huge amount of stock repurchases this year yeah which most retail investors don't understand but the long and short of it is your rates are going to keep going up and when we see the treasury yield curve from t. bills up to ten years the fed's going to have to blink right they're going to have

to set up i'm sorry we didn't mean that because otherwise this thing is going to we're going to be in a recession by two thousand and twenty all right so bloomberg interviewed a former i.m.f. economist martin gellman who says that the russian economy is actually the best of the big economies pointing in particular to the central bank of russia's policies chris whalen your thoughts russia is still basically an extract of economy they make money on commodities they don't have a big industrial base so some are based on they have been a bigger than their energy business yes ok but i point is that when you look at how they make money and how they interact with other countries that's still a story now they have to rule i want to join or at least during the debate now actually. if you listen to that debate a lot of stuff was set other than the two or three words that were highlighted that day were things putin said was that ok rush oil price if it gets too high it's bad for them because it focuses too much attention on the energy sector and they need to diversify when it gets too low it cars trains them of capital reserves so

there's a sweet spot where the price of oil should be i mean that's a remarkable kind of data point that people need to keep in mind going forward planning the economies of the world and i care the two biggest energy producers in the world picking a spot and they're holding the spot opec now is is not a factor opec is in disarray and i think the russians very astutely are trying to avoid what's happened both to the gulf states and in this way alone in other countries where they've just become entirely dependent on energy they do think about the versifying anything. from a the point that russia is something like fifteen billion twenty billion into the us versus china versus you that can easily get to fifty billion one hundred billion two hundred billion dollars it's of commerce between these two countries does a lot of jobs with america. right i mean if you're pro jobs i would think people are going to can trump just make that point like you know what the sanctions are stupid because we're going to export two hundred billion into russia that's another

anyway we got to go we got to go chris started let's pick this up on the time thanks for being on the kaiser report them or all right that's going to do it for this edition of the kaiser report me my skies are safe here but life there goes chris whalen and i just on twitter it's kaiser report and i saw you know. four men are sitting in a car when the fifth gets shot in the head. all four different versions of what happened one of them is on the death row there's no way he could have done it there's no possible way because the owners did not shoot around a corner. the

kremlin confirms president putin has oafish received an invitation from washington to meet with donald trump for a second major summit later this year. also ahead in the program facebook is mocked for so-called cultural censorship after it removes on birds featuring the works of a seventeenth century artist known for his nude paintings. the white house has threatened to revoke the security clearances of six obama era intelligence officials accusing them of politicizing their public service leveling baseless accusations of president from. iran the clock across the world this is your r t international from the team and

myself you don't know me a welcome to the program a top kremlin aide has confirmed that president putin has received an official invitation to visit washington for a summit with donald trump in the autumn moscow say it's ready to discuss the proposal donald trump expressed willingness for another round of talks after the two leaders met in helsinki last week second meeting potentially with putin. is that in the works is it planned has it been you know i would say it's in the works. we had a tremendous discussion on many things but fact is we got along very well i think i have a good relationship with you the next time the two leaders meet could be at the g twenty summit in argentina or right here in d.c. in the nation.