China Should Have Read "The Art of the Deal"

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Go to noblegoldinvestments.com. Okay, there's a lot going on. As you know, President Trump came on while we were live on air yesterday and pressed pause and said pause on the tariff implementation. Now mind you, there is still a baseline 10% tariff. So there are still 10% tariffs across the board.

China is still going to have a massive amount of tariffs on them, but for Vietnam and South Korea and Madagascar and Japan, we are seeing a pause. The volatility is not going away anytime soon. I'm not even going to do a play-by-play on the market right now because the market is so up and so down and so all over the place. It's up and it's down. If I say one thing, it's going to be outdated five minutes from now. It is so volatile.

Instead, I want to bring you into the room based on some public reporting and stuff that I've known privately, but I wasn't going to talk about publicly until of course it was publicly reported and it has been publicly reported by Jonathan Swan and the New York Times and many people, which is the element of who else got a vote. Now, typically when situations like this occur, the Treasury Secretary gets a vote, the Vice President gets a vote, the President gets a vote, but something else got a vote of whether or not to pause the 90-day tariffs, and that is the bond market. You hear a lot about stocks.

We talk a lot about whether Nvidia is up or Apple is up and you hear that all the time on CNBC. You hear a lot about gold. We have some great gold partners on this program or cryptocurrency, but a massive part of the market you don't hear about are bonds. What is a bond? A bond is a type of a long-term security.

You loan somebody or something money and they pay you back over a period of several years. So, companies issue bonds. Cities famously issue bonds, municipal bonds.

In fact, they're tax-free. And most importantly, our own government, the United States government, issues trillions and trillions and trillions of dollars in bonds. Now, they are considered to be the safest investment.

Why? Well, because it's backed by the full faith and credit of the United States. There are four types of bonds. There are Treasury bills, otherwise known as T-bills. They're very short-term, and you do not get what is called a coupon.

A coupon is basically money back on your investment in the bond. Then there's something called Treasury notes, which are two to ten years. They do pay interest about every six months.

They're very popular with individual investors and institutions. Then we have something called Treasury bonds, which mature over 20 to 30 years. They pay interest or a coupon every six months, and they're often used by pension funds or long-term investors. And then we have TIPS, Treasury Inflated Inflation Protection Securities, which principle adjust with inflation measured by the Consumer Price Index, CPI.

And interest payments rise if inflation rises. Okay, so typically bonds are a safe refuge during turmoil. If all of a sudden the markets get a little jittery, you go to the bond market. When you hear about the federal government running a deficit, the way we finance that deficit is through bonds. The U.S. government sells a Treasury bond, which takes in money and now in return for a promise to pay interest over some period of time. There are, again, as I mentioned, short-term and long-term Treasury bonds. The interest you earn on these bonds fluctuate according to the market. Well, U.S. Treasury bonds are hugely influential on the entire global market. The United States government has never defaulted on its debt. Traditionally, U.S. bonds are considered the most ultra-safe investment there is.

They are the floor of the market. A common idea is this, never invest in something that is likely to underperform Treasury bonds. One of the reasons why Scott Besant was selected as Treasury Secretary is he is a bond expert. He understands the bond market better than anybody else. Scott Besant understands what moves bond prices. And what was happening from late Tuesday night to early Wednesday morning was a very good 10-year auction, but a disturbing spike in bond prices and a disturbing spike in bond activity, which China was playing their nuclear card, which is what set President Trump up so much. One of the reasons why President Trump said China is not exempt and we're going to unite the entire world against China is China was intentionally trying to create a run on American bonds. China was intentionally, dare I say, playing with the idea of collapsing the American bond market. Bonds have collapsed. The bond market has collapsed more government than howitzers, missiles, or bullets. Famously, of course, the Russian default, 1998, the Russian government collapsed and they defaulted on $40 billion of domestic debt and devalued the ruble.

The yields on short-term Russian Treasury bills, otherwise known as GKO's, skyrocketed as investors fled the market. Argentina in 2001 had a sovereign default. Argentina defaulted on over $100 billion in sovereign debt, the largest default in history at that time. The bond collapse resulted in Argentinian bond prices plummeting and yield spikes over 30%.

Capital fled the country and of course the peso collapsed. You might remember back in 2010, the Greek Eurozone debt crisis. Greece revealed that it has been under-reporting its deficit causing investors to panic and dump Greek government bonds.

Greek 10-year bond yields soared past 35% make it impossible for Greece to borrow on the open market. Greece had to be bailed out by the EU and the IMF under strict austerity terms. There's examples after examples of countries that are collapsing because of the mismanagement of their bond market. When countries can't sell bonds, they have to resort to other means of paying their bills, like devaluing their currency and hyperinflation. And what we were seeing and what we were afraid of on the horizon was a run on the bond market, was potentially the American economic established order very well could have had a financial crisis similar to that of 2020 or 2008. President Trump made a very prudent move and China played their strongest card. Now understand Scott Besant said that the 10-year auction was actually very good, which is interesting, which means that people are betting on the long-term viability and the long-term prosperity of this country. They're happy to say, okay, I'll do a 10-year bet, but a six-month bet, I don't know. Basically, people are long on America when it comes through over a decade, but in the next three to six months I'm not so sure because of all these tariffs. And tariffs were the forcing function to actually get people to go away from treasury bonds, which is incredibly complicated and somewhat contradictory because typically when the economy is during a moment of jitters, people go to treasury bonds. So, it makes it even more complicated. All that to say is that the bond market has a vote.

Let's play cut 235. Secretary, how much of this decision was driven by the bond market cratering overnight? What is happening? Is China selling their bonds? I am nothing that says that and we actually had quite a good 10-year auction today and all this was, again, this was driven by the president's strategy. He and I had a long talk on Sunday and this was his strategy all along and that, you know, you might even say that he goaded China into a bad position.

They responded, they have shown themselves to the world to be the bad actors. This is incredibly complicated stuff. All this to say, the way we finance our government is through a bond. A bond note is like an IOU note. It's an IOU that the government can then give to people where it needs to pay back. When you buy a bond, you're lending them money and they promise to pay you back later with interest. When the bond market gets disrupted, the entire funding of our government can get put into jeopardy. direct line to the IRS.

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That is 1-800-958-1000 or visit TNUSA.com slash Charlie. I want to play more pieces of tape here. There is a fair amount of volatility and uncertainty that's happening in the international capital markets. The old way of thinking though, was that we do not question or challenge the offshoring of American labor internationally. That it's a good thing that China gets wealthier and that we are financing it and we are funding it. And all the right people are speaking out against the Chinese aspect.

Here's John Bolton, who is dreaming of a ground war against Iran, saying the following, play cut 174. What Trump is doing is a huge opportunity for China worldwide. These tariffs are a form of economic illiteracy. Trump has no idea really what he's talking about. He doesn't understand how tariffs works. So what he's doing has put us in a very vulnerable position and probably in the worst position possible.

And it's just sad and depressing that more Republicans haven't stood up and said that. This is illiteracy. You know what was the illiteracy, John Bolton? The fact that you designed probably one of the most immoral wars in American history, if not the most, when you designed the invasion of a sovereign country of Iraq.

That was illiteracy and that was outright immorality. John Bolton, the neoconservatives don't like this because President Trump is getting more without war. He's getting more through economic means than mobilizing aircraft carriers or spending unnecessary trillion dollars on needless wars.

But understand what President Trump is doing is so, so brilliant. So we got China on defense. We got the entire free world that is coming to negotiate deals. And meanwhile, where's Pete Hegseth? This is my favorite wrinkle of the entire story.

Where is Pete Hegseth? When you are trying to challenge a rising global power and a rising empire, a rule is that the empire will not care as much about their colonies as they do the homeland. So you go right after the colony to liberate it and bring it back under our hemisphere.

What are we talking about? We're talking about the Panama Canal. It is perfect timing. It is 10 out of 10 timing what Pete Hegseth is doing. Pete Hegseth goes down to the Panama Canal and says, this is not China's. We are going to liberate it.

Play cut 179. I want to be very clear. China did not build this canal. China does not operate this canal. And China will not weaponize this canal. Together with Panama with Panama in the lead, we will keep the canal secure and available for all nations through the deterrent power of the strongest, most effective and most lethal fighting force in the world. We will do this in partnership with Panama. Together, we will take back the Panama Canal from China's influence. And we will do this along with other capable like-minded allies and partners.

This is what peace through strength looks like. Look, we know that the Panama Canal connects the Atlantic and the Pacific Ocean. It's an incredible engineering feat and accomplishment that which thousands of Americans died to actually make possible. Five percent of all global maritime trade goes to the Panama Canal. Not having control of the Panama Canal is a major security risk to the western hemisphere. China's growing influence in Panama through all of their state-owned companies means that they could choke point necessary trade and commerce in our hemisphere. And we know what China does. They operate through economic coercion and dependence. So they take control of the Panama Canal.

They then have leverage in our hemisphere. And we are kicking the Chinese Communist Party out of the Panama Canal. But it's a perfect time to do it because China's on defense. China is seeing a domestic stock market collapse. China is seeing all of a sudden their number one export partner, the United States of America, is saying, time out, we're actually not going to do this anymore, 104 percent tariff and it's only to go up. So China has to prioritize which fight they are going to pick. And at that moment, you strike for the Panama Canal. You strike for the choke point, which is exactly what Pete Hegseth is doing, saying we're not going to put up with the Chinese Communist Party hegemony over the choke point of trade between the Pacific and the Atlantic. That is not going to happen under President Trump's watch. And the Chinese are probably like, look, we got nine different fights on here.

Fine. Let them head to Panama Canal. They're not going to give it up that easily. But the Chinese Communist Party has to triage which of the many problems they're going to fight on right now. And the one that the CCP is most worried about is Lao Baijing.

The people of China might be rising up because of a domestic economic collapse brought to you by Trump's tariffs. Hey, everybody, Charlie Kirk here, brand new year, brand new opportunities to change the world for the better. It's easier than you might think. You can save babies by providing ultrasounds with preborn together with the sanctity of Human Life Month. We're going to save thirty five thousand babies to show the world that not only do we believe life is precious, but we're going to do something about it. Your gift to preborn will give a girl the truth what what's happening in her body so that she can make the right choice. What better way to start this new year than to join us to save babies and twenty eight dollars a month will save a baby a month all year long. A fifteen thousand dollar gift will provide a complete ultrasound machine that will save thousands of babies for years and years to come and will also save moms from a lifetime of pain and regret. I am a donor to this organization and you should be, too.

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CharlieKirk.com, preborn banner. Joining us now is Grant Cardone, equity fund manager, real estate investor, Cardone Capital, author of The 10X Rule and GrantCardone.com. Grant just recently hosted me at a pretty amazing event in Las Vegas. Grant, it's great to see you. Grant, welcome to the program. Grant, what is your take on President Trump's negotiation and leverage that he's using via tariffs? As a businessman, what is your analysis? Well, I understand, Charlie.

First of all, always great to be with you, enjoying our time together in Las Vegas and love everything you're doing. I understand that the art of the deal is a best seller across China this morning because the government is reading how to negotiate with probably the master, best, most genius, most calculated negotiator on planet earth. Your comments earlier about the Panama Canal, this is called stacking. When you negotiate transactions, and I've negotiated very large transactions, not, you know, hundred trillion dollar negotiations like are taking place right now across the world, but you want to stack your ask, meaning that you want to overwhelm the other party with the number of things that you want, almost to the point where you sound ridiculous. And then you start settling or removing things that maybe aren't so necessary.

So I think your analysis of what Trump did with the Panama Canal is absolutely spot on. Things like bringing, you know, majority of the countries to the table was not to bring them to the table, but to let China know, hey, they're coming and sooner or later you're going to come to. So, Grant, I love that stack the ask. Let's talk more about that in practice. What does that do to the party that is on defense? So how does the Chinese respond to that?

Let me ask this differently. What happens, Grant, when you're on the other side of the table and someone is stacking the asks against you? How do you then prudently respond to somebody that is using that sort of strategy and that kind of expertise?

Yeah, that's a great question. Okay, so if it's me being on the other end of the stack, the question always is who has the leverage? Like four things have to happen in negotiations. You have to have decision makers at the table. We don't yet, by the way, with the tariffs. Two, you have to have a desire and a willingness to come to an agreement. We don't have that. Three, you have to have urgency.

Trump does not have that yet. So the only thing he has is the fourth weapon, which is leverage. So in the beginning, if somebody's stacking against me, I have to calculate how much leverage do I have here? If I don't have leverage, Charlie, then what happens is I get overwhelmed. And then I start whether, whether you, whether I say it or not, I mentally start unpacking how much I'm willing to give up.

I imagine I came to the table believing I would give you this. And then you start stacking on me. Like I start basically unmocking or compromising with my own self, what I'm willing to give up.

Okay. It could be in a divorce settlement. You know, the, let's say the wife comes at me and says, I want half and I want the house and I want the boat and I want the plane and I want the kids. She might not want any of that stuff, but she starts overwhelming me.

And then if I don't have leverage, she's going to win probably more than she actually thought she could or would. So that, that is, I hope my wife never hears this by the way. Well, no, I pray none.

No, no, no one gets into a divorce. I pray. It's a terrible, awful thing. In some ways though, metaphorically we are looking at, we're looking at, it's a great comparison though, because what U S and China are brokering is a little bit of a divorce or a decoupling of the way that the two powers have been interacting over the last 20 or 30 years. And we're going to have to renegotiate those terms. Just looking at this objectively Grant, as a businessman, who's done billions and billions of dollars of transactions and, you know, has done tens of billions of dollars of value through everything you're doing, and who has the cards here? Who, who is the one that you would say is the shrewd operator that acting as if they have leverage kind of stake it out here as an objective third party, who like, what, what cards does the United States have? What cards does the China have?

And then kind of give us a little bit of an analysis there. Well, look, I mean, you know, a lot of people have leverage in a situation and they never use it in the case of the United States of China. We have leverage that cannot be duplicated anywhere and has not been duplicated anywhere on planet earth, which is a consumer economy. You know, I was asked once what, what's easier to create a manufacturing economy or consumer economy. No one has created a consumer economy. Many countries have created a manufacturing economy.

I would rather have a blend of both, but America has the greatest consumer economy on planet earth. Every country needs us. We have maximum leverage. Now what leverage does China have? Well, they make products and services cheaper than we can. They have 1.4 billion people, but they lose that Charlie because their economy is terrible. They've tried 26 different stimulus to fix their economy.

None of them worked. They have an aging population, as you know, and they're in trouble right now for all the troubles that we have. China has 10 X more and any leverage point they did have, they're going to lose because ultimately they, their economy is so weak that, that being said, we lose some leverage because of the way our political system is set up. If enough people turned on Trump, particularly internally, that would flip the leverage back to China. And that's why we need people to consolidate, particularly American citizen needs to pray for a firm and send best wishes to president Trump, because he's attempting to do something that has not been done by any president in my lifetime and should have been done by all of them. So then how do we, going back to that sequence of your analysis of how big deals happen, how do we make sure that this does not get heightened to a kinetic war or tensions blow up and just get boiling into levels that we don't want to see them happen?

How do we make sure this is within guardrails? Explain the balance, Grant, because I'm sure you've had deals that have blown up. Yeah. Please explain. Yeah. Cause you can back, you could back a dog with rabies into a corner and then he's going to bite you. So you don't want to do that.

So you have to be very careful. I think president Trump yesterday telling everybody, look, it's just 10%. Everything's cool. What he did was he relieved all the tension. I think the, the media was saying, Oh, he caved in, he didn't cave in. You want to relieve pressure in a negotiation.

So no one feels cornered and just wants to, you know, in this case, nuke, which would never happen by the way, in my mind, but you do need to bring the players to the table. Remember the first three things are decision-maker willingness, three urgency. You increased, Donald Trump increased the urgency yesterday.

You had, you had many countries. I don't know what the exact number is. Could have been as many as 70 that came to the table and said, okay, we're ready. We have urgency. And Donald Trump said, don't even worry about it. It's just going to be 10% and we're cool. That leaves China out by themselves.

Kind of looking like, well, what do we miss here? Uh, again, and president Trump knows there's egos involved. Egos are very, very important when negotiating. You don't want to trap a guy. You don't want to make a guy look bad. So let, let me interrupt you there at Grant.

I'm so glad that you mentioned that. I mean, there is no bigger ego than Gigi ping. He looks at himself as the king of the world, king of China.

He's control of 1.4 billion people. How, and then you have equal amounts of personas across the board. How then do you navigate with the egos, with the pride of the Chinese culture?

How do you go through that thicket? It's an enormous task. Look, I imagine he's on the phone with him right now. All these players at that level have egos. Nobody wants to look bad, whether it's president of China or the president of the United States of America, the high ego drive, by the way, is necessary in order to be a winner. And there's nothing wrong with it.

I think it's highly recommended for people to actually develop some kind of ego that has humility and a balance mixed in. And I could imagine Donald Trump or Howard Lutnick letting China know yesterday, Hey guys, we're going to come to a solution. Everybody knows we're just negotiating here. Like this is a big boy game.

It's very transparent. There's nothing wrong with telling the other side, we're trying to get the best deal for us. I know you want the best deal for you. Everybody knows exactly what's going on.

So I imagine he's softening the rhetoric that we're hearing here in America so that they can stay at the table and save face. Why don't you plug some of the stuff you're working on? You've got books, you got all sorts of stuff.

Kind of give us an update on what Grant Cardone is up to. Well, look, look, I'm an educator. My whole life I've been an educator.

My dad died when I was 10 years old and my uncles didn't come to mentor me. And I always promised if I ever got successful, I was going to help other people. So we're an educational company that tries to, attempts to share financial literacy and competency.

And I wrote President Trump when he won the election. Hey, I'd love to participate in making America intelligent again around their finances. So that's what I do.

My company educates people on, you can find me almost anywhere, just plug the name in, Grant Cardone on Google and you'll see all this stuff I'm doing. We've got a big real estate fund. We're changing the way real estate is invested in right now by putting real estate and Bitcoin in one fund with no debt, by the way. And we're going to take real estate from what it was doing, which was an eight or 10% return to 30 and 40% annualized return. So I'm really, really excited about that. We'll probably take that public toward the end of the year or the first of next year.

I'm actually having a meeting on it right now. WhyRefi? WhyRefi is great.

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That is WhyRefi.com. Grant, I know you got to be careful about giving individualized investment advice, but tell us about how you are thinking about this volatility and some of the principles that you think people should employ during economic uncertainty. Okay. What people should be doing, by the way, this is financial advice. I am not a financial advisor, but I will get financial advice. If you're invested in the stock market, you should not panic right now. I would tell you and suggest that you should reassess what you're invested in. Depending on your age, if you're in a 401k, IRA or a Roth, I think people need to reconsider what that really is today. These are old vehicles that have been created that look like tax advantages to the public that Charlie, you and I have talked about before.

I really believe these will not be great mechanisms for people in the future. They have been great for Wall Street. These are $38 trillion has been invested in retirement funds that I am very concerned in the future, 10, 15, 20 years from now are going to be taxed not at the 19% they are now, but at, you know, 50 and 60 and 70%, particularly if we had the wrong politicians, you know, at the table.

But I would tell everybody reassess what's in there. What companies are you really invested in? Do they do those companies that you're invested in actually match up with your moral compass?

Because I think you'll find that many of those companies do not. And then reevaluate what your returns are. Second thing I would say is, you know, you should be invested in real estate. Everyone, every American should have money invested in real estate, the cash flows. There's a tremendous correction going on in the housing apartment marketplace.

Charlie, you and I have talked about this. It's happening from Scottsdale to Sedona all the way to New York City to Miami. It's a massive correction going on. I have made my family and our investors hundreds of millions of dollars just in the last year because we're buying real estate that no one's looking at, at very corrected prices, below replacement value because the debt market's problematic right now. So there's tremendous opportunity, particularly in the apartment space for individuals and middle class people to create wealth using real estate.

Very good. So, Grant, super quick, just what are you hoping to see as an investor from tax cuts? You know, as we mentioned, it's not breaking news, but the House has passed the budget resolution package, which is great, which will pave the way. What do you want to see more than anything else as a deliverable to full depreciation? What do you think is really going to supercharge this economy? One minute remaining, Grant.

Yeah, that's one of them. You know, any investments in any manufacturing, any new buildings, any new housing, 100% bonus depreciation. I like that. What I like better than that, and I would be willing to give that up, is basically gut the IRS, go to a fair tax, zero federal income tax nationwide.

I think that's actually doable in this term. I don't think most people believe that, but I believe it is, and I believe it would be a great thing for Americans not to pay federal withholding tax. Learn how to invest your own money. The IRS is never going to do it better for you than you can do it for you. Short of that, states are going to start looking at reducing their property taxes. Florida is doing it right now.

Texas is looking at it, and I think those states that do that, Charlie, are going to be big winners, and they're going to draw more people and more companies to their states. Very good. Grant, thanks for everything, man.

Looking forward to seeing what you have next and what you have coming down the schedule for you. So thanks, Grant. We really appreciate it.

Yeah. Appreciate you, man. And I'm still working on California.

I'm going to do my best to flip California red this year. You're the best. Thanks, Grant.

Talk to you soon. Thank you. Thanks so much for listening, everybody. Email us, as always, freedom at charliekirk.com. Thanks so much for listening, and God bless. For more on many of these stories and news you can