'We're going to have a strong economy through 2020': White House trade adviser

Peter Navarro, director of the White House Office of Trade and Manufacturing, joins Martha Raddatz on "This Week."
7:16 | 08/18/19

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Transcript for 'We're going to have a strong economy through 2020': White House trade adviser
And I'm joined now by Peter Navarro, the director of the white house office of trade and manufacturing policy. We appreciate you coming in this morning, sir. We know the labor market is strong. We know consumer confidence remains high. But on Wednesday, we saw the worst drop in the stock market this year, and although there was some recovery, there are indicators that the U.S. Could be headed for a recession. So, before I came to the white house I spent a better part of 20 years forecasting the business cycle and stock market trends, and what I can tell you with certainty is, we're going to have a strong economy through 2020 with a bull market, here's why, things are shaping well. First of all, the federal reserve going into the holidays will be lowering rates significantly, what that will do is, it will help our investment directly and help our export indirectly. Secondly, the European central bank has signaled strongly that they're about to engage in a very aggressive round of monetary easing that will help not only revive the economy of Europe but also help build exports. I think China is going to have a second round of fiscal stimulus, what that will do for the global economy will help the developing countries that sell commodities for their manufacturing machine. By early October, if congress rises above partisan politics, we should have passage of the u.s.-mexico-canada trade agreement. This is without hyperbole, the largest trade deal ever in history. It's also going to give us hundreds of thousands of more jobs, more growth points, and there are a couple of other things I should mention -- It seems a lot of IFS. If this happens, if that happened. The fed will be lowering rates. Ecb will be engaging in monetizing. There's also an if with Brexit over in Europe. This is important. Because that's suppressed investment in Europe, I think, by October 30th that situation is going to be resolved one way or the other. Let me talk about -- It's shaping up well worldwide. Let me talk about the indicators, though, the inverted yield curve. It has inverted before every U.S. Recession since 1955. There was one false flag, even though it may be brief, how can you be so confident? I love to talk about the yield curve. I didn't write the book on the yield curve but I actually wrote several books on the efficacy of the yield curve. First of all, we did not have a yield curve inversion right now by technical standpoints. You have to have a significant spread between short term and long term. Martha -- I know you talked about the flat. Again, if this was only a brief inversion or flat. You're still not worried about that. It's flat but not for bad reasons but for good reasons. We have the strongest economy in the world. Money is coming here in the stock market. What that does, when foreign money comes in it drives the prices of bonds up and yields down, that flattens the curve. So, all that needs to happen here, Martha, is for the federal reserve to do what it needs to do which is to begin lowering interest rates, there's a general consensus now on wall Street and everywhere else in the country, if fed raised rates too fast. We should have been at 3% growth rate. The federal reserve's interest rate hikes cost a full point of growth. All we need, Martha, is to reverse that. Have Europe do what they need to do. China do their fiscal stimulus. The economy will have a bullish cycle going through 2020 and beyond. Let me tell you, "The wall Street journal" editorial board dubbed this the Navarro ry session and they wrote a second editorial this week, the Navarro recession II saying Mr. Navarro and president trump spent Wednesday blaming the federal reserve for the market meltdown and we suppose any scapegoat will do in a storm. We've been warning for two years that trade wars have economic consequences but the wizards of protectionism told Mr. Trump not to worry. The key to avoiding the worst is restore a sense of policy calm and confidence. I would add to that, businesses are not blaming the federal reserve. For example, the national retail federation explicitly said uncertainty for business and the new tariffs will result in high costs for consumers. And slow the U.S. Economy. Clearly, not everyone agrees with you. When the main street journal starts attacking this administration is that when we worry. Where was the Wall Street journal, in 2001, when China got into the world trade organization. We watched the exodus over 70,000 of our factories, why isn't the Wall Street journal been editorial idesing over the last ten years about China hacking our computers to steal trade secrets, about stealing our intellectual property. About the currency manipulation that occurred for over a decade. So, "The Wall Street journal," look -- We don't have a trade deal, though It's called "The Wall Street journal" for a reason. It represents Wall Street. "The Wall Street journal" never saw an American job it didn't want to -- But let's talk about tariffs which has consumers concerned and businesses concerned. The president delayed some of those tariffs until after Christmas, why would delaying tariffs help America consumers? I love this question, we have $300 billion worth of Chinese exports that didn't have yet tariffs. What the president did was, he looked at that and as of September 1st, about half of that will be tariffed at 10%. Now the other half, why didn't we tariff the other half? One of the things that the president does beautifully is engage with the business community, labor leaders and everyone in between. I was sitting in the oval office when a group of executives came in and told us this, Martha, all the stuff they were going to have on their store shelves during the Christmas holiday, already bought in dollar contract. It means that these people did not have any power to basically shift the burden back to China, so the other thing we heard from these business leaders was that, just give us some time, December 15th, and by the way, we're taking all of our sourcing production facilities out of China and we will continue to do that. China, and that's why the president -- Are you optimistic about a deal? I'm optimistic that the president will do the right thing for America and we have some significant structural issues with China that we need to address. Thanks for joining us this morning, Mr. Navarro.

This transcript has been automatically generated and may not be 100% accurate.

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