Squawk on the Street (CNBC)

An Interview With Jim Cramer

Squawk on the Street (CNBC) – Senior Counselor for Trade and Manufacturing Peter Navarro Interview

JIM CRAMER: joining us now to explain as well as share the latest on trade talks, senior counsel for trade and manufacturing always a strong voice for the president peter navarro. all right, peter, i'm going to give you the floor because it's a great.

SENIOR COUNSELOR PETER NAVARRO: pleasure to be with you, buddy.

CRAMER: and the same. and you know that. and i feel that way. and i read your piece, i said, okay, here's a person that has strong conviction on fed chair powell, and i'm going to give you the floor to describe your view.

COUNSELOR NAVARRO: yeah. well, let's let's start with what the stakes are. if, if he's too high at the fed, let's say it's like a half point now. too high. that's like anywhere from a quarter to a half a point of gdp growth that we're going to lose. in other words, we're going to grow more slowly. that's like a $100 billion that costs our economy. and then when you when you trickle it down to the interest rates that people pay, that's about $100 billion in added debt because we're refinancing debt. so it's not it's not small potatoes. now, in terms of the argument, let's see if we can agree on on on two things. right? i claim in the hill piece that powell has made three major blunders. let's see, jim, if we can agree on the first two, when we were in the first term with president donald trump, and we had the tariffs and the tax bills and the whole trump nomics going on, powell raised rates too high. and by the fed's own analysis, that cost us a lot of growth. so let's see if we can agree on that. and then when he was serving the biden regime so well in a partizan way, in my judgment, he didn't raise rates fast enough. he let them get out of control. he also kept his mouth shut. well, the democrat congress was passing these massive expenditure inflationary bills and he was too late. powell then he was too early. powell in the first term. can we agree, jim, that those blunders happened? is there any doubt that powell should was was wrong twice in the earlier years?

CRAMER: i'm going to say no. i think there's a lot of time in between that he did things right. i totally agree on 2018. it was very against that. when it comes to what happened in terms of transitory or not, what i think it was an honest mistake. i will not give you that. it was partizan. i will just say it's an honest mistake. but i think it was a mistake in my judgment.

COUNSELOR NAVARRO: but it.

CRAMER: was a misjudgment.

COUNSELOR NAVARRO: okay.

CRAMER: yes.

COUNSELOR NAVARRO: so he's made two, two big mistakes so far. and now the third one is the question is jim which isn't it. it's like rates should be lower. the markets are telling us all of that. powell is doing the same thing he did with the first term of donald trump. he doesn't understand trump economics. he doesn't understand the supply side aspects of tax cuts and deregulation. he doesn't understand the importance of strategic energy dominance and the president's ability to dramatically lower oil prices. and he doesn't have a clue about tariffs, because in the first term, very clearly we raised tariffs and there was no inflation. most of the tariffs got eaten by the foreign countries as we expected. well the same thing's happening again.

CRAMER: these are not similar.

COUNSELOR NAVARRO: is he waiting.

CRAMER: these are much bigger tariffs. we know that we have.

COUNSELOR NAVARRO: to we have seen absolutely no pass through of tariffs. it's just not in the data jim. and by the way what's wrong with the more flexible fed. why not lower rates and see what happens. what's the big deal.

CRAMER: because from september through december of last year they cut rates four times and the long rates went up dramatically hurting the mortgage rates. we don't want that to happen.

COUNSELOR NAVARRO: well that that happened okay. why did he cut rates. he was trying to get biden or harris elected. come on. well come on. that's the partizan aspect of this. and by the way, i mean, look, whether he's let's let's look at the history. i think the hill piece is interesting because i go back, talk about how arthur burns helped nixon get elected with easy money. i talked about how greenspan and you and i were there. we were in the trenches when he raised rates and killed off the.com boom. and we had all that. that was a mistake. we saw bernanke slow to understand systemic risk, and he let something which could have been manageable get out of control. and look, jim, there's no question that this stagflation that emerged during the biden years was not just the product of the democrats. see the picture behind me that that that capitol hill where all that bad stuff happened, the inflation reduction act and all of that. that only happens, jim, if the fed accommodates that, you go back to william mcchesney. martin. i think chesney, martin and volcker are the two best fed chairs. but chesney martin, when lyndon johnson was prosecuting the vietnam war and wouldn't trade off guns for butter, he said, no, i'm taking away the punch bowl. that's not going to happen. powell could have spoken up. he should have seen the inflation that just quickly got out of control, that we're now tamping back down. so i'm just saying jim he's a lawyer not an economist, which is an anomaly that the two worst fed chairs we've had in recent memory were g. william miller, who was also a lawyer and now powell. so i think the case against him and i would say where scott besson the little clip you played, it's like, remember powell is just part of the board. right. and so i'm i'm in some sense appealing to the board. it's like, come on.

CRAMER: let's get with the program. i want to let karl in here because i think you've made your point. i think you made your point where you feel i disagree with the ranking. but, karl, there are other issues.

CARL QUINTANILLA: we do have. you. i've always. i've always wanted to ask you for the last 90 days about your comment on april 7th, when you said 90 deals were possible in 90 days. we're almost up. and i just wonder, was your thinking at the time that it really was an aspirational number, or are you kind of disappointed in two? for now.

COUNSELOR NAVARRO: i'm happy with with the progress we've had, because every country that we run a major deficit with is fully engaged. i think what we're learning from the negotiations is simply, karl, how difficult it is for these countries to give up the advantage they have over us. and so therein lies the tale. i think the negotiations are proceeding well. and by the way, the tariff revenues are coming in and really helping this country. and we're able now to get trillions of dollars of investment here to build up our factories and jobs. the tariff revenues are coming in which help pay for the big, beautiful bill. and i'm i'm very pleased with the direction we're going. we've got howard lutnick, jamison greer, scott besson all engaged in these deals. and the president, of course, at the top.

CRAMER: of this there, your team. i want to go back just for a second. why? if you're a paypal, why not wait to see a couple of quarters if there is an inflation, what's that going to do to the economy? you've got an incredibly strong economy, peter. it's remarkable.

COUNSELOR NAVARRO: so we've already had that argument. we've waited like two quarters, as scott said hurt us here.

CRAMER: employment is terrific.

COUNSELOR NAVARRO: you asked me a direct question. i'm going to give you the answer. fair enough. the answer is simple.

CRAMER: fair enough.

COUNSELOR NAVARRO: a 50 basis point lag. if we're we're up 50 basis points too high, that's a ton of money. that's going to be a half a point of gdp growth slower than we otherwise could and should be. and remember, when you have slower growth, jim, you have less tax revenues and more debt and deficit. and then you got a balance, the whole thing, all these synergies that, that that work with the trumponomics powell is not allowing to happen. and that's the tragedy here. so he's costing he's costing homeowners on their mortgages. he's costing americans with their credit card debt. he's costing us in terms of our national debt growing. so there's a real opportunity cost for.

CRAMER: him misreading this. but i do want to know, as the trade person, i've not seen you lately for trade. we've got some things that disturb me. you have a great american company that arguably has put 2.9 million people to work in our country, which is apple. it seems like no matter where apple goes, the we find that they have to be taxed high. and i know that they're committing $550 billion to the country. and unless you directly contest tim cook's honor what is enough for you?

COUNSELOR NAVARRO: apple. look jim, going back to the first trump term, tim cook has continually asked for more time in order to move his factories out of china. i mean, it's a it's the longest running soap opera in silicon valley. and my problem with tim cook is he never takes the steps to actually do that. and with all these new advanced manufacturing techniques and the way things are moving with ai and things like that, it's inconceivable to me that tim cook could not produce his iphones elsewhere around the world and in this country.

CRAMER: but india. you wanted vietnam. suddenly, you know, these are not easy decisions. you wanted us to leave china. they apple is trying very hard. they're a huge manufacturer. how about something like this? apple is a great company and there are a gem of our country. and what we're going to do is we're going to respect that they moved to india. when it comes to us, we sure wish they would do more, but they're doing 550 billion away from that. what more do we need from this great american company?

COUNSELOR NAVARRO: jim, let's let's stipulate that i cannot you and i cannot solve apple's problems today on this show. what i'm really concerned about is, is what's going on with the federal reserve today.

CRAMER: and i did want to ask one more thing. you know, we have to see elon musk. obviously, he lost some things in the big bad bill. he has not been as complimentary of you. i know you too long to repeat the things that he said because it doesn't. i don't like that level of discourse. but obviously you must have a feeling about someone who would, who does not think that you're as intelligent as i've known you for many years and has really, i think, used that kind of derision that i find to be not part of the discourse. what do you say back to him?

COUNSELOR NAVARRO: well, here's what i would say about elon in terms of the big beautiful bill, which is, i think, where the discourse should stay focused on. if you look at the analytics of this congressional budget office, where they come up with a $2 trillion increase in the debt, it's the same kind of mistake they make that jay powell made in the first term. it's like they when they when they scored the bill in 2018, they they scored it wrong. they were a point off in gdp growth. and we got all sorts of revenues instead. so when you accurately score the bill, the big beautiful bill, you get another point of gdp growth, which is a couple of trillion dollars. so the debt comes down. and then when you adequately score the tariff revenues, you get another couple of trillion dollars and you move from a $5 trillion. it's a $5 trillion thing from you go from a 2 to $3 trillion deficit to a 2 to $3 trillion surplus. and it boggles my mind, jim, that not enough people are talking about that in the legacy media, because that's the numbers.

CRAMER: that those numbers are that people should listen to you and realize that you did not come back with some sort of gratuitous, capricious statement about about elon musk. and i applaud you. you are the scholar and gentleman that i've known for 50 years. thank you so much to peter navarro.

COUNSELOR NAVARRO: always a pleasure to be with you and carl. thank you. take care.