Ambassador to mexico and el salvador. Ester george joining us on the company with another inversion to talk about. Former economic senator United Nuclear iran chairman joe linerman, kyle beth, great insights there on markets and china he will be here onset. Dont miss a moment of it, we have a big show this morning, futures are down, we know why, markets are lower right now by about 60 points, down 7 on s p and nasdaq down 32 after yesterdays big rally boosted by positive retail earnings and stimulus hopes, china issued trade warning increased tariffs could escalate tensions and they are urging washington to meet beijing halfway, President Trump spoke about it yesterday. We are winning against china, they lost 2 and a half Million Dollars in a short period of time, has to be a deal fit for the United States, they want to make a deal, probably we will make a deal, somebody had to do it. I am the chosen one, somebody had to do it and im taking on china. Maria have to admit, the president has changed the conversation on china, liz peek. For the last decade american corporations basically did whatever it took to stay in china to exploit the cheap labor there and also be present in a growing market. I think it should have started 10 years, very important confrontation and one by the way farmers of america are still supportive of even though they are the people who are getting, you know, basically hammered by it. So we will see what happens. I do think china does want a trade deal. Its just right now they have both sides have to safe face and its very difficult calculation. Maria we have seen impact on the chinese economy. 80 of north American Companies are trying to diversify, who wants to be dependent on nonrule of law country . Maria affecting both economies, oped, cut the trump uncertainty tax, mr. Trump doesnt need to win stairdown with jinping, he can make promise now and respond accordingly if he gets second term. Elizabeth warren sits in the white house. Very good analysis there, james. Thank you, thank you on behalf of my colleagues, yeah, the trade war is having cost, we see that in Business Investment slowdown. I think it would turn down immediately if there was a deal, if there was some progress and then we could monitor to see if china follows that, but, i think its also a another reason if the president wants to continue to play this out with china to to seek trade peace with friends. Stop threatening europe on auto tariffs, get rid of steel and aluminum tariffs, look for zero tariff deals with our friends in asia, there are other places there but sometimes takes one time to move supply chains, if he pushed to zero tariff with friends in asia maria he feels theres global alignment against china and bad behavior. I was with art the other day, if theres a china deal, hes expecting dow 30,000 if theres a china deal, taxes and rates are impacting taxes just as much. He talked about it earlier in the week as a way to boost the economy, this is what he said yesterday. Im not looking to do indexing, i studied indexing, i want taxes for the middle class, the workers, the people that work so hard. Maria so no taxes there, no tax cuts . Disappointed. Index cut to the Capital Gains tax indexing would be powerful. You we wanted to see that . I do. Maria the Federal Reserve making a comment yesterday that midcycle adjustment, dont expect this to be the new era of a change in policy, i found that disturbing, what about you . The markets clearly expecting a great deal more, i think that would be the challenge when we have september meeting or even friday when chairman powell speaks, but, yeah, the short end of the curve is telling us we have to cut, we have to cut more. Minutes were out and central bank thought recalibration of policy, noted how Global Economic growth remains at risk, what do you think that means, liz . Well, i think its all about what is happening outside of the United States, i think the fed what we saw in those minutes was a real different of agreement because not everybody is on board with cutting rates, how can they be, our economy is doing pretty well and rates are very low and there has been this general thought you want to get them back to more normal levels but the truth is we are out of step with the rest of the world and by the way, the rest of the world has to question whether they are doing the right thing with german 30year bond did not fell well at zero Interest Rates, shockers, people want to get return for the money, totally distorting World Markets and i think the most positive thing thats happened recently is germany talking about fiscal stimulus, thats exactly what has to happen, one of the few countries that can do it and they should do it. Maria what do you think, james . I dont think we want to be in step with europe and negative Interest Rate policy, i dont see rates as being too high, as driving any business decisions, i think its all about trade, im looking forward to your ester george interview, im not sure she buys into this either, that we need to keep cutting rates, doesnt seem that way from the last minutes but on the taxation, really disappoint, i think the president missing, former chairman, economic advisers, buying into this crazy argument that that only rich people benefit from Capital Gains tax cuts, no one else in america owns any assets and and his Corporate Tax reform proved that when you cut rates and you encourage investment, Workers Benefit hugely and that was research and led to great tax reform and we need more of it. Maria lets not forget all of the 401 k s out there that benefit from the Capital Gains tax cut and the payroll tax cut was also a head scratcher, why not do the indexing, why not well, what happened is the markets responded to trump talking about tax cuts. The white house is scared about a recession. Maria talking points on the left. The recession narrative and i think it is a narrative which all of a sudden that President Trump realizes i stepped in it again by saying that and he had to reverse course. To nancys point, the Capital Gains indexing is something that makes economic sense, so much weight of argument behind it and by the way, 52 of americans own stock directly or indirectly according to the fed, its not an elitist activity at all. Maria it gave the left an opportunity to criticize him and say hes panicking. Yeah. Maria and obviously it struck down the conversation which is what they wanted. Exactly. Their narrative for a day, if you get the good policy, he shouldnt worry too much about that. Maria they cant talk about things about unemployment, oops, its at 50year low, we saw 3. 1 and 2. 1 growth in the first two quarters, so its obvious that they are, you know, ramping up this talk of recession because they dont know where else to go. Pounding the table when it inverted for 20 minutes. Exactly. I found that astonishing. So many weird reason that is the thing could invert. I thought yesterday they talked about the inversion that happened in terms of buying and selling security for various groups makes sense, its not an economic signal in my view. Maria more on this, top stories this morning, short break, when we come back a manhunt is going in california, police are searching for a sniper wanted for shooting an officer, we will take you there and ge details, choice words from harry reid about progressive policies m candidates are promoting on the left, we will take a look at what he said on the party policy, stay with us. Alistic tr. Beep, beep, beep, beep children traffic jam announcer and the worlds first never bump bumper cars. Children never bump announcer its a real savings hootenanny with options that fit your budget. Thats fun for the whole family. Announcer only at progressive par. Maybe an insurance park was a bad idea. Yeah. Yep. Maria welcome back, two u. S. Service members killed in action. Cheryl good morning, soldiers identities and details on what happened, still not known, 14 troops killed in afghanistan so far this year, right now special envoy in qatar for peace talks with taliban and possibly end americas longest running war. Well, a manhunt here at home for the sniper who shot a sheriffs deputy outside of a station, Angel Reynosa expected to be okay, the bullet proof vest. Two stocks we are watching for you nordstrom and l brands, retailer posted a strong profit despite weakening secondquarter sales, however, lowered guidance. Take a look a shares of l brand, down 1 in extended trading, the Victoria Secret owner with disappointing sales. Store sales falling by 6 . Dicks Sporting Good will be coming out, the gap, maria, and ross stores, we are talking about shopping, maria. Maria so far a very good retail season in if he terms of what we seen, thanks, cheryl, we will take a break, when we come back, taking aim at auto sector, his plan for more auto tariffs coming up. Focus on the Federal Reserve, chairman jay powell view rate cut, the yield and inverted managingaudreys on it. S . Eating right . On it staying active . On it. Audrey thinks shes doing all she can to manage her type 2 diabetes and Heart Disease but is her treatment doing enough to lower her heart risk . [sfx crash of Football Players colliding offcamera. ] maybe not. Jardiance is the number 1 prescribed pill in its class. Jardiance can reduce the risk of cardiovascular death for adults who also have known Heart Disease. That means jardiance can help save your life from a heart attack or stroke. Plus, jardiance lowers a1c and it could help you lose some weight. 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This is how car buying was always meant to be. This is truecar. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Maria welcome back, markets under pressure this morning, take a look at futures, dow futures down 30 points, off of the lows of the morning, s p futures down 4 and nasdaq lower by 19, we are talking about the Federal Reserve today, stock maintained gains on strong retail earnings after minutes of Federal Reserve showed that the officials believed that the july rate cut was simply a recalibration of policy, joining me now optimal capital analyst francis newton. Francis, good to see you this morning. What do you think that tells us, recalibration for future rate cuts . Well, i think that they are not committing by anything and thats why trump is frustrated by. Its about turning the titanic, those Interest Rate increases probably actually havent worked their way completely through the system yet. Trump is saying get ahead of this, get ahead of this, interesting to see what the gdp numbers Going Forward to see if we are following the rest of the world, hard to take out the comps from last year on some of the earnings, thats what trump wants them to get ahead of. The regional fed president talks about how much they listened to businesses in their districts and im wondering are any of them here hearing from people, the rate is too high, you have to cut a quarter point, is this the thing in business because i havent heard it . Its not keeping me up at night, no. Theres so much debt in the system right now that that tinny little quarter point makes a bigger difference over the longer trajectory and i think thats what the fed is being challenged with, obviously most of europe is negative and thats the hesitancy of the part of the fed, two theories, do they start cutting now to get ahead of the wave which makes sense to turn the titanic or so do you save the bullets . When we had tech global burst, 500 basis in 2008, quantitative easing with the rest of the world going negative, the bullets become very valuable. Maria does it bother you that the yield its at 10. 85 , whats your answer to rockbottom numbers . My answer is theres a record amount of debt in the system because ben bernanke said we did not finance enough, quantitative easing and the only way to have super, super low yields. Thats exactly to marias point thats why they, in fact, are they behind the curve, overseas obviously is tremendous red flag it seems to me causing all kinds of distortion, so businesses may not be Holding Back Investment but exporting right now with the strong dollar is clearly a challenge, i mean,i just think we cant be the odd one out, i totally agree with you. The thing thats interesting, better to get ahead of cutting, think about this, everyone is chasing the premium on the face value of bonds. If yields pick up a little they will lose so much value, when they mature they will have losses because its so low or if they sell bonds, endure huge losses and the reason the bond market is inflated because the United States is one of the only places for yields. Endowments, safe treasuries, those yields pick up a little depending on your maturity which is why the shortterm is most popular right now. It is really a touchy thing. What about the 10year, the real yield is negative. Very very easy. Do you worry about that and if so whats the solution . I will tell you what makes me worry about that a little bit, is that we had peak earnings in europe and china in 2017, we had peak earnings in Third Quarter of 2018 in the United States, when you look at the Business Cycle in general, we are just a little bit late rolling over and i feel like when the United States finally rolls over people will go to cheaper assets in europe and china eventually, i dont know if they have bottomed out yet and i think that becomes very important as far as where are we on trajectory of trying to paper our way out of this debt with decelerating earnings and earnings recession, if we have credit problems we will see recession and best scenario stagnation until we get less leverage. Maria would you buy europe equities, they dont have any bullets in terms of cutting rates . I wouldnt buy them just yet but they are going to look very cheap if the expense of markets in america start to really fall. Yeah. Theyve been cheap for a long time. I think they are going to get a little cheaper, i think they are trying to bake in quantitative easing but at some point their stimulus is ahead of our stimulus and the United States start the decelerate a little bit more. They are ahead but its not working. Not yet. To answer the question, shouldnt savers get a return on on their money when they lend, whether its an institution or a government . Ideally, absolutely, but i think we are on praecipes if you read ray dalios book, the painful option that we have rather than having debt crisis, if you go back, some of the things people from the left have coming in, this is not the time of spending tons of money in the environment, spending tons of money on Free Education and free health care, its not the time and the cycle because we are loaded down. Maria would you allocate money in the stocks right now . No, too high for me. Maria selling to any rallies . Im actually selling into some of the rallies on certain stocks, im lowering my equity, at the firm we have very low exposure to equities, utilities, we have been doing great all year because of the defensive plays, personally im unloading stocks for the fall. Maria nancy are you on the other side of the trade . I am. [laughter] we will talk about how youre allocating capital. Francis, good to see you, thank you so much for joining us. Coming up wild fires ravaging the amazon rain forest with no end in sight, heavy smog heading over several brazilian cities, harry reid going after progressives, what policies he claims are a loser for democrats and we are taking a look at nordstrom shares soaring this morning, better than expected earnings, stock is up almost 10 , back in a minute right here. Maybe ill win saved by zero maria welcome back, good thursday morning, thank you so much for joining us, top stories before 6 30 a. M. On the east coast, markets pointing to lower opening this morning, dow industrials down about 35 points, s p down 4 points, nasdaq lower by 21. This after strong reports from retailers yesterday, the ease fears of slowdown have pushed markets much slower, almost 1 , s p was up 23 and nasdaq up 71, almost 1 , we also have the 10 and 2year bond yield invert briefly before closing bell. In europe this morning, markets look like this, there was an unexpected rise in the euro zone purchasing managing index for the month of august. We had germany selling, cac quarante in paris down 17, ftse 10 is