THE REASON IT TOO FAST BECAUSE

THEY THINK THE ECONOMY IS SO

GOOD.

>> JOINING ME NOW IS CHIEF

ECONOMIST AT THE MILKEN

INSTITUTE, BILL.

THANK YOU FOR COMING IN.

LET'S START WITH THE MARKET.

WE'VE NEVER HAD A POINT GAIN

LIKE THIS BEFORE IN THE HISTORY.

WHAT YOU MAKE OF IT?

>> WE CAN CALL OF THE --

RECOVERY.

IT'S SAFE AND WE DON'T HAVE TO

WORRY ABOUT A CHANGE IN THE FED

SHARE.

SUDDENLY THE MARKETS TURNED

AROUND.

DESPITE THE FACT THAT IT

COMPLETELY FLOODED

COMPLETELY FLOODSD

COMPLETELY FLOODS THE MESSAGING.

HE COMMUNICATED TO THE MARKETS

THAT WE ARE READY TO PAUSE.

THE ECONOMY MAY SLOW AND WERE

GOING TO BE CAUTIOUS.

HE SAID WERE ON AUTOPILOT.

>> WHAT DIDN'T SCARE THE MARKET

WAS INCREDIBLE RETAIL FIGURES.

THEY WERE VERY GOOD.

I'M WONDERING TO WHAT EXTENT HAS

THE MARKET BEEN UNDERPLAYING THE

EFFECT OF THE GENERAL ECONOMY.

>> IT'S VERY SOUND.

WERE EXPECTING ABOVE TREND

GROWTH IN THE U.S. ECONOMY.

IS FUELED BY THE LABOR MARKETS

THE JOB GROWTH IS SPECTACULAR.

IT'S GIVING CONSUMERS CONFIDENCE

AND THEY ARE DECREASING THEIR

SAVINGS RATE WHICH IS NOT

SUSTAINABLE.

WERE LOOKING FOR TAX CUTS TO

KICK IN AND BOOST PRODUCTIVITY.

THAT HAS TO COME INTO PLAY.

WHAT'S UNCERTAIN IS WHETHER THE

SPAT WITH CHINA'S CAUSING FIRMS

CUT BACK ON THEIR INVESTMENTS.

>> DAVID: WHAT BOTHERS ME IS

WHEN WE CONTINUE TO HEAR THAT

THEY ALL WENT TO STOCK BUYBACKS.

WHEN YOU HIRE A WORKER YOU HAVE

TO SPEND AN AVERAGE OF 10,000

DOLLARS.

THAT IS AN INVESTMENT IN HUMAN

CAPITAL.

AN INVESTMENT MADE MILLIONS OF

TIMES SINCE THE TAX CUTS AND

THAT'S WHY WE HAVE MORE JOBS AND

JOB SEEKERS.

>> LET'S NOT FORGET, EVERYONE

SAYS IT STOPS BUYBACKS BUT THAT

DOESN'T MEAN THE MONEY

DISAPPEARS.

THE SHAREHOLDERS ARE SAYING IF

THEY CANNOT USE MY MONEY I'M

GOING TO PUT IT TO WORK IN OTHER

COMPANIES.

IT DOES TRICKLE BACK.

IT TAKES LONGER.

THE MARKETS ARE IN TURMOIL SO

ALLOCATING THESE FUNDS BECOMES

MORE DIFFICULT.

IT DOES NOT MEAN MONEY

DISAPPEARS.

>> THE PRESIDENT WHEN HE SAID

IT, I GUESS IT WAS TWO MONTHS

AGO WHEN HE POINTED OUT THE FED

WAS MOVING TOO FAST ON HIKING

INTEREST RATES LOT OF PEOPLE SAY

COME ON, THIS IS UNSEEMLY TO

HAVE A PRESIDENT ATTACKING THE

FED.

BUT IN FACT DIDN'T LOOK LIKE

TRUMP WAS RIGHT.

>> EVERY PRESIDENT GONE BACK TO

LYNDON JOHNSON HAS HAD A PROBLEM

WITH THE FEDS.

NO PRESIDENT LIKES THE FACT THAT

HE'S DOING THIS IN AN

INDEPENDENT WAY.

TRUMP IS JUST GOING BACK TO

REMIND THE FEDS THAT WE HAVE TO

LOOK AT THE ECONOMY WITHOUT

BEING ON AUTOPILOT.

THE MARKETS WERE SPOOKED THEY

HAVE BEEN DOING EXTRAORDINARY

THINGS.

MONEY HAS BEEN AT ZERO INTEREST

RATES FOR WAY TOO LONG.

THE FED IS ALSO TOLD LISTS WERE

DOING IT SLOWLY.

TRUMP SAYS WE HAVE TO DO IT

SLOWLY BECAUSE WE DON'T WANT TO

JEOPARDIZE RECOVERY.

>> IT'S NOT JUST THE STOCK

MARKET.

THERE'S A WORLDWIDE ECONOMIC

SLOWDOWN.

IN EUROPE IS PARTLY BECAUSE OF

THEIR POLICIES IN CHINA IT'S

LARGELY BECAUSE OF WHAT WE HAVE

BEEN DOING TO GET THEM IN ORDER.

IT WOULDN'T TAKE THAT MUCH FOR

WHAT'S HAPPENING IN THE WORLD TO

AFFECT US TO THE POINT WHERE WE

HAVE A SERIOUS SLOWDOWN.

>> THE U.S. IS THE ONLY BRIGHT

LIGHT IN THE GLOBAL ECONOMY IN

TERMS OF GROWTH.

EVERYONE ELSE IS STRIP

STAGGERING UNDER WHAT SOCIALISM

AND HIGH GOVERNMENT SPENDING

BRINGS ABOUT.

CHINA IS FEELING THE EFFECTS OF

THE TARIFFS MORE THAN WE

THOUGHT.

THE PRIVATE SECTOR IS IN DANGER

OF SLOWING DOWN.

THEY'RE PUTTING IN PLACE OF

FISCAL POLICIES.

>> DAVID: THERE IS AN ARTICLE IN

THE NEW YORK TIMES LAST WEEK

SUGGESTING THERE ARE PEOPLE IN

THE PRIVATE SECTOR IN CHINA AS

INTRUSIVE AS THE COMMUNIST

GOVERNMENT IS, THERE ARE PRIVATE

ENTERPRISES AND THEY LIKE WHAT

DONALD TRUMP IS DOING BECAUSE IT

GIVES THEM MORE LEVERAGE TO WORK

AGAINST THE HARD-CORE COMMUNISTS

TO ENCOURAGE MORE OPENING IN THE

ECONOMY.

DO YOU AGREE WITH THAT?

DO YOU THINK TRUMP IS ON THE

RIGHT SIDE OF THE ISSUE?

>> TRUMP IS HELPING THE PRIVATE

SECTOR OF THE CHINESE ECONOMY

BECOME MORE INDEPENDENT.

THEY'VE BEEN KNOWN TO BE HUGE

BEHEMOTHS.

WE NEED TO PRESERVE INTELLECTUAL

PROPERTY RIGHTS.

THERE'S A LOT OF DEVELOPMENT OF

NEW PATENTS IN CHINA.

THEY WANT THEIR RIGHTS

PROTECTED.

WE WANT MARKET ACCESS, WE BOTH

WANT TO PROTECT INTELLECTUAL

PROPERTY WERE STARTING ON THAT

TRACK BECAUSE THE CHINESE HAD

LOVE LEGISLATION THAT SAYS

INTELLECTUAL PROPERTY THEFT IS

ILLEGAL.

THE CHINESE ARE FAMOUS OF

PUTTING IN LAWS THAT ARE NOT

ENFORCED.