The bond market has taken down more governments than howitzers, nuclear weapons, or war. And that's because it's a safe haven during times of turmoil. Today on the Charlie Kirk Show, we explain the bond market, and then we have Grant Cardone to go through an amazing analysis of how negotiation occurs and how we should approach the Chinese issue.
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00:02:18.000Instead, 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.
00:02:28.000And 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.
00:02:35.000Now, 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.
00:05:48.000From 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,
00:06:07.000which is what set President Trump off so much.
00:06:09.000One of the reasons why President Trump said China is not exempt and we're going to unite the entire world against China.
00:06:16.000China was intentionally trying to create a run on American bonds.
00:06:20.000China was intentionally, dare I say, playing with the idea of collapsing the American bond market.
00:06:28.000The bond market has collapsed more government than howitzers, missiles, or bullets.
00:06:35.000Famously, of course, the Russian default, 1998.
00:06:39.000The Russian government collapsed and they defaulted on $40 billion of domestic debt and devalued the ruble.
00:06:46.000The yields on short-term Russian treasury bills, otherwise known as GKOs, skyrocketed as investors fled the market.
00:06:54.000Argentina in 2001 had a sovereign default.
00:06:57.000Argentina defaulted on over $100 billion in sovereign debt, the largest default in history at that time.
00:07:03.000The bond collapse resulted in Argentinian bond prices plummeting and yield spikes over 30%.
00:07:11.000Capital fled the country and, of course, the payback.
00:07:18.000Greece revealed that it has been under-reporting its deficit, causing investors to panic and dump Greek government bonds.
00:07:25.000Greek 10-year bond yields soared past 35%, make it impossible for Greece to borrow on the open market.
00:07:33.000Greece had to be bailed out by the EU and the IMF under strict austerity terms.
00:07:38.000There's examples after examples of countries that are collapsing because of the mismanagement of their bond market.
00:07:45.000When countries can't sell bonds, they have to resort to other means of paying their bills, like devaluing their currency and hyperinflation.
00:07:53.000And 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
00:08:09.000crisis similar to that of 2020 or 2008.
00:08:14.000President Trump made a very prudent move and China played their strongest card.
00:08:20.000Now 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.
00:08:34.000They're happy to say, okay, I'll do a 10-year bet
00:08:40.000Basically, people are long on America when it comes through over a decade.
00:08:45.000But in the next three to six months, I'm not so sure because of all these tariffs.
00:08:51.000And 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.
00:09:06.000bonds. So it makes it even more complicated.
00:09:09.000All that to say is that the bond market has a vote.
00:12:42.000You know what was illiteracy, John Bolton?
00:12:44.000The 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.
00:12:53.000That was illiteracy, and that was outright immorality.
00:12:57.000John Bolton and the neoconservatives don't like this because President Trump is getting more without war.
00:13:01.000he's getting more through economic means than mobilizing aircraft carriers or spending unnecessary trillion dollars on needless wars.
00:13:09.000But understand what President Trump is doing is so, so brilliant.
00:13:28.000When 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.
00:13:44.000So you go right after the colony to liberate it and bring it back under our hemisphere.
00:14:25.000We 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.
00:14:37.000We will do this in partnership with Panama.
00:14:41.000Together, we will take back the Panama Canal from China's influence.
00:14:47.000And we will do this along with other capable Like-minded allies and partners.
00:14:52.000This is what peace through strength looks like.
00:14:55.000Look, we know that the Panama Canal connects the Atlantic and the Pacific Ocean.
00:15:00.000It's an incredible engineering feat and accomplishment.
00:15:02.000That which thousands of Americans died to actually make possible.
00:15:06.0005% of all global maritime trade goes to the Panama Canal.
00:15:11.000Not having control of the Panama Canal is a major security risk to the Western Hemisphere.
00:15:27.000They operate through economic coercion and dependence.
00:15:32.000So they take control of the Panama Canal.
00:15:34.000They then have leverage in our hemisphere.
00:15:36.000And we are kicking the Chinese Communist Party out of the Panama Canal.
00:15:41.000But it's a perfect time to do it because China's on defense.
00:15:44.000China is seeing a domestic stock market collapse.
00:15:48.000China 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.
00:15:56.000104% tariff and it's only going to go up.
00:15:58.000So China has to prioritize which fight they are going to pick.
00:16:01.000And at that moment, you strike for the Panama Canal.
00:16:04.000You strike for the choke point, which is exactly what Pete Hegseth is doing.
00:16:08.000Saying, 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.
00:16:16.000That is not going to happen under President Trump's watch.
00:16:19.000And the Chinese are probably like, look, we got nine different fights on here.
00:16:24.000They're not going to give it up that easily.
00:16:25.000But the Chinese Communist Party has to triage which of the many problems they're going to fight on right now.
00:16:31.000And the one that the CCP is most worried about is Lao Bai Jing, the people of China, might be rising up because of a domestic economic collapse brought to you by Trump's tariffs.
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00:18:12.000First of all, always great to be with you.
00:18:13.000Enjoyed our time together in Las Vegas and love everything you're doing.
00:18:17.000I understand that the art of the deal is a bestseller across China this morning because...
00:18:24.000The government is reading how to negotiate with probably the master, best, most genius, most calculated negotiator on planet Earth.
00:18:33.000Your comments earlier about the Panama Canal, this is called stacking.
00:18:37.000When you negotiate transactions, and I've negotiated very large transactions, not $100 trillion negotiations like are taking place right now across the world, but you want to stack your ask, meaning that you want...
00:18:53.000To overwhelm the other party with the number of things that you want, almost to the point where you sound ridiculous.
00:19:01.000And then you start settling or removing things that maybe aren't so necessary.
00:19:08.000So I think your analysis of what Trump did with the Panama Canal is absolutely spot on.
00:19:17.000things 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.
00:19:26.000And sooner or later, you're going to come
00:21:02.000Let'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.
00:21:09.000She 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.
00:21:20.000I hope my wife never hears this, by the way.
00:21:24.000Well, no, I pray no one gets into a divorce, I pray.
00:21:30.000In some ways, though, metaphorically, we are looking at...
00:21:34.000It'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.
00:21:48.000Just looking at this objectively, Grant, as a businessman who's done billions and billions of dollars of transactions and has done tens of billions of dollars of value through everything you're doing, who has the cards here?
00:22:00.000Who is the one that you would say is the shrewd operator that acting as if they have leverage?
00:22:06.000Kind of stake it out here as an objective third party.
00:22:09.000What cards does the United States have?
00:23:10.000They have an aging population, as you know, and they're in trouble right now.
00:23:14.000For all the troubles that we have, China has 10x more.
00:23:18.000And any leverage point they did have, they're going to lose because ultimately their economy is so weak.
00:23:29.000That being said, we lose some leverage because of the way our political system is set up.
00:23:37.000If enough people turned on Trump, particularly internally, that would flip the leverage back to China.
00:23:43.000And that's why we need people to consolidate, particularly an American citizen needs to pray for, affirm, and send best wishes to President Trump.
00:23:53.000Because 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.
00:24:00.000So 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...
00:24:11.000Tensions blow up and just get boiling into levels that we don't want to see them happen.
00:24:15.000How do we make sure this is within guardrails?
00:24:18.000Explain the balance, Grant, because I'm sure you've had deals that have blown up.
00:24:47.000You want to relieve pressure in a negotiation so no one feels cornered and just wants to, in this case, nuke, which would never happen, by the way, in my mind.
00:25:02.000Remember, the first three things are decision-maker, willingness, three, urgency.
00:25:07.000You increased, Donald Trump increased the urgency yesterday.
00:25:11.000You 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.
00:27:46.000My company educates people on, you can find me almost anywhere, just plug the name in, Grant Cardone on Google, and you'll see all the stuff I'm doing.
00:28:52.000Grant, I know you've 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.
00:29:16.000I am not a financial advisor, but I will give financial advice.
00:29:20.000If you're invested in the stock market, you should not panic right now.
00:29:24.000I would tell you and suggest that you should reassess what you're invested in.
00:29:29.000Depending on your age, if you're in a 401k IRA or a Roth, I think people need to reconsider what that really is today.
00:29:36.000These are old vehicles that have been created that look like tax advantages to the public that, Charlie, you and I have talked about before.
00:29:44.000I really believe these will not be great mechanisms for people in the future.
00:29:50.000You know, 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,
00:30:05.00050 and 60 and 70%, particularly if we had the wrong politicians, you know, at the table.
00:30:13.000But I would tell everybody, reassess what's in there.
00:30:16.000What companies are you really invested in?
00:30:18.000Do those companies that you're invested in actually match up with your moral compass?
00:30:24.000Because I think you'll find that many of those companies do not.
00:30:27.000And then reevaluate what your returns are.
00:30:30.000Second thing I would say is, you know, you should be invested in real estate.
00:30:34.000Everyone, every American should have money invested in real estate that cash flows.
00:30:39.000There's a tremendous correction going on in the housing.
00:30:54.000I 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.
00:31:11.000Because the debt market's problematic right now.
00:31:13.000So there's tremendous opportunity, particularly in the apartment space, for individuals and middle-class people to create wealth using real estate.
00:31:58.000What 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.
00:32:09.000I think that's actually doable in this term.
00:32:12.000I don't think most people believe that, but I believe it is.
00:32:15.000And I believe it would be a great thing for Americans not to pay federal withholding tax.