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Why is that? Charles Gasparino of Fox Business Network and senior correspondent there, a New York Post columnist. What's going on in the market today? Well, I mean, let's be clear. Yesterday was a relief rally, right? Now, then the stocks generally go back to trying to factor in what's happening.
And still there's, you know, no matter how many times Scott Besson says that, you know, this was their plan all along, this really wasn't. The markets forced their hand, particularly the bond market, because the bond market is essentially signaling bad stuff. That's why we had a lousy auction the day before they caused the cause. That's why you had massive yield spikes that Tuesday night, which were almost unprecedented. I've never seen anything like that. It was a clear, you know, wicked selloff that suggested there was real problems in the plumbing that this tariff stuff was causing. So what does that mean in the plumbing? So if you know anything about bonds, I mean, I've been covering bonds my entire life.
I know almost too much about it. There's the plumbing of the markets is this whole system where banks and companies essentially borrow to operate. They have to borrow short term because no company has the money on hand. Like Fox doesn't have the money on hand to cut you and I a check every week. They just, you know, they don't have enough.
You, me and everybody else. Right. So what do they do? They turn to the short term borrowing markets. Right.
They essentially go out and issue commercial paper. It's easier. It's more manageable. It's kind of cheap because, you know, it's short term debt and it works. And everybody gets paid.
Right. If they couldn't pay us, that would be a real problem. It would have a company people to walk out.
So that's what they do. That market in and of itself, that plumbing, that bond market, which controls all that, started to implode on Tuesday night where people were not able to borrow on that short term basis. And not only that, the U.S. government needs to refinance its debt. That market started to implode. On top of that, when that market started to implode, 10 year interest rates on the 10 year and the 30 year went through the roof.
Now, what does that mean? That all affects borrowing rates for consumers. It makes it more expensive for companies and for consumers, particularly homeowners, to buy houses.
It was real bad stuff that was being signaled. It was across the board in the plumbing of the markets known as the bond markets. You could call it the credit markets.
There's a whole bunch of ways this is described, but it's much more important than the stock market because it essentially drives the stock market. If you get all those higher yields, stocks would implode. Now, if we had a 5% yield on a 10 year, which is where it was heading, and I'm pretty sure Scott made this really clear to President Trump.
Well, guess what? The NASDAQ, instead of going down 5% a day, might go down 10% a day. Because people would start saying we're in real problems. Actually, they start buying bonds at that point because it's cheaper if you get more bang for your buck than taking the risk on the video.
Or you go into cash. I mean, that's kind of what goes on. And that's what we were facing, a real plumbing problem with the markets. Now, does that problem still exist? It's not as acute as it was.
The pause has people breathing a sigh of relief. Remember, some of this is a confidence game as well. But some of those underlying problems are still there. And you know, a lot of it is not Donald Trump's fault.
And here's why. He inherited a stock market that was way overvalued, just so you know. I mean, the video was like trading at some astronomical level compared to its earnings.
Basically, way out of balance, right? 60 times price are PE. That's nuts.
The average PE is like 20, right? Three times as much. AI might be great, but it's not doing the great stuff now based on its earnings, right? So that's one thing. On top of that, we literally went into a debt frenzy under Joe Biden and Kamala Harris, particularly at the end where they essentially started printing money to prop up the economy to get Kamala Harris elected.
That is all true. And they did it in the most nefarious ways. They issued a lot of short-term debt, which needs to be rolled over. All of that is weighing on the markets. I really believe if it wasn't for this tariff thing, the markets might have sold off on something else. There would have been a catalyst.
Tariffs was the easy one because it caused people to look at valuations immediately. But it could have been a terrorist attack. It could have been whatever.
But he inherited this. So my guess is that the markets today are reflecting that those underlying scissors that I just mentioned are really not dealt with. I mean, tariffs might be the instigation and it might make it a little worse, but something else is there and something else could happen. And I think that's where you're getting out of the markets trading off today.
Maybe, Charlie, I'll tell you a lot. There's something else. The markets are down about 900 points right now. So do you think that now that China is digging in and we're digging in, 84 percent tariffs on our stuff, 104 on their stuff, but we get a lot more of their stuff. There's some talk in the New York Post today that it looks like China might start just making a whole bunch of products and dumping them through the European market and our market. Would we accept that?
Could this happen? Well, we shouldn't. But, you know, if you're going to go to war with someone on trade, that's the type of stuff they pull. By the way, they it's not like they have an economy based on anything real.
They make up accounting. They use slave labor, you know, go down the line. You know, they can they can kind of press a button here and do stuff like this.
You know, we can't do that. You know, so I know I wouldn't be surprised. I mean, and it sounds like I mean, I don't know the sourcing on that.
I actually didn't read the story, but he told me that they were planning that I wouldn't be surprised. That's stuff that they do. You know, there are complete mercantilistic economies. They they have a very poor population still in many respects.
Right. They have a high rates of poverty and a lot of a lot of people that are in poverty. And they they they they deal with that poverty to trade. You know, that's kind of like what they that's kind of like the one weapon they got. They have trade.
And they produce stuff cheaply and they use slave labor. So if you take that away from it, they might get desperate. So this could get really hairy. And, you know, by the way, that's a pressure point that the markets are factoring in now. But, you know, if stocks were trading at real at their sort of quote unquote fair value, they weren't overvalued. I think we would not have this sort of like puking of the folks of stock prices that we're having now.
It would be a different, you know, it would be a different dynamic going forward. Fox News Audio presents the Fox Nation Investigates podcast. Evil Next Door, exploring the life and crimes of five serial predators from across the United States.
Listen and follow now at Fox True Crime Dotcom or wherever you get your favorite podcasts. So, Charlie, the way we have a U.S. imports to China, 143 billion U.S. imports from China, 438 billion. The U.S. deficit with China, 295 billion. So when people say that they have leverage over us, is that short sighted or because they need to sell us their stuff? We are the top market. Can they make it up elsewhere?
Not easy, but, you know, if they try, it could get really hairy. Just because they're willing to go, they are, they have the type of economy that's situated to go nuclear. You see what I'm saying? I mean, let's be clear, like we don't have that economy.
If we didn't have that economy, if we had an economy where we can go nuclear on trade, Donald Trump would not have paused. His hand was forced. There's no doubt about that. And you think it was by the bonds. Well, it was bonds, but remember, the bonds selling off would have sparked an even bigger depression in stocks.
I mean, it's all related, but yeah, the bond thing is what, from what I understand, the bond thing is what really freaked out. Because he has to sell the treasury debt. I mean, remember, that's what he does. Part of his job, right? Finance the deficit. If ever higher interest rates are being demanded, which is what was happening, he has a big problem on his hands.
On top of that, in the next two years, he's got gazillions of dollars of debt that need to be refinanced, because Janet Yellen issued so much short-dated debt that you need to refinance that debt. You see what I'm saying? I mean, it's just, it's a pickle. So, and it's a matrix. And, you know, you can break it down all you want.
It's complicated. And, but, you know, one thing I do know is this stock market was overvalued. It was looking for reasons to trade off. And, you know, I got a good one with the tariff stuff. Yeah, so the response to Trump's tariffs, trying to negotiate Japan, South Korea, the U.K., Switzerland, Malaysia, Singapore, Brazil, Colombia, Turkey, Australia, and Italy. That's a lot.
They offered concessions in Vietnam, Taiwan, India, Thailand, Indonesia, and Israel. Do you, how do you, would the markets respond as President Trump starts announcing good trade deals with these nations? Two a day?
Three a day? Would the markets start getting encouraged by that? I think so.
It's hard to tell, like, where people are focused on. Are they going to not then switch their world of worry to China? And, you know, reset valuations based on what's going on in China. Remember, like a lot of these tech companies. I mean, what was driving the markets over the last two, three years? It was like seven stocks, right? And they were all tech companies like Apple and stuff like that.
And they all had significant, you know, operations in China. So does that mean the markets start focusing on Apple's, you know, the cost of Apple relocating, domesticating its factories and all that? And, you know, listen, you're asking me, like, will the markets trade, you know, trade off? I'm not saying it's good public policy. Yeah. It may be really good public policy.
Bring them all here and screw the markets. I'm just saying that it's, if you think that it's going to be easy, you know, the markets are going to like, you know, stocks, stocks are going to take a hit. Bonds might freak out. I mean, this is, we're in like, this is difficult stuff.
And it's difficult stuff because, you know, I can't stress this enough. He was handed a pile of, you know what? I mean, like the amount of debt that Joe Biden, you know, in the last three months of Joe Biden's presidency, they issued like $300 billion in debt. That's insane.
They just like, they just ramp it up. That's on top of what they should have spent that. And they did a lot of it in short term borrowing, which means you got to kind of roll it over.
It's due soon. So why would they do that? Why would you do that? To get Kamala Harris elected is the only thing I could think of. Keep the economy juiced. And so some of this is reflective of investors saying, you know, we've got to keep paying this stuff. It's expensive.
It takes money out of the economy and puts it to like and puts it in the hands of foreigners, which is what it does. On top of that, stocks by normal valuations are overvalued significantly. And now you've got a tariff thing to worry about. So, I mean, that's what I am saying.
This is this is kind of like I don't think it's a quick fix. You know, it's going to be is it necessary is really the question. I tend to think it is necessary.
I mean, I when I said it is necessary, I'm not sure if it was necessary. The way he handled it, the way the president handled it, that he should have got the tax cuts first. And the big, beautiful budget, whatever he calls it, first, you know, deregulation, a doge.
And then when the economy starts humming, start going piece by piece with our trade partners and say, this is what we're going to do if you don't stop. Have you heard from the White House since you you made that statement? I watched you live after the president announced a freeze or or three or 90 day pause.
I have not. Well, one guy that's close to Trump said he thought it was more the stock market than the bond market. But we're really talking the same thing because the stock market was so lost that they didn't deal with the bond market. And Trump came out kind of contradicted that anyway, said it was like, you know, bots are getting crazy. He was watching him and all the reporting today confirmed my reporting yesterday. I did hear from Besson's people. They said thank you.
I said something nice about it. Because he needs to take the lead, right? Don't you agree? Yes. Yeah.
And I thought, listen, if I if I like erred in what I said yesterday, significantly, trust me, it's been all over me. But I've not heard a word yet. Right. Absolutely. And we haven't heard much of Peter Navarro either. That's interesting. Although I did see I did see Lutnik on the air last night.
Yes. You know, I don't think Trump's going to just blow these guys out. I mean, I know everybody's like, who's the first to go? First of all, Navarro went to jail for Trump. I don't think he's going to fire him over this. Lutnik raised him a lot of money. I think Trump legitimately likes Lutnik.
They go back a long time. Lutnik was a supporter when no one else was. So I don't think anyone's getting fired. I just think who's who's got his ear? Well, I mean, I think he likes the fact that the markets like Besson's, right?
Yeah. So and Besson takes a more measured approach. And, you know, and I think Trump is obviously I mean, it's so obvious he's taking Besson's approach and he's dealing. And Besson probably told him, well, the other guys didn't look at the bond markets. Yeah, I would be I'm telling you that that is what that guy looks at bond markets. I hear you.
He obsesses about the 10 year. Wim, you know, Charlie and I assessed to get your assessment on what's happening right now. It's an exciting time.
Charles Gasparino, thanks so much. It is time to take the quiz. It's five questions in less than five minutes.
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