UP ABOUT 17 SO THERE IS SOME
FEAR IN THE MARKETS.
JUST WANT TO LET YOU KNOW IF YOU
THINK BREXIT TAKES A BACK SEAT
TO ALL THE NEWS TODAY, IT IS
ABSOLUTELY NOT, JUST BECAUSE
IT'S HAPPENING ON FAR AWAY
SHORES.
IT ABSOLUTELY HAS THE ABILITY TO
AFFECT US HERE.
DO YOU REMEMBER JUNE 24th OF
2016, WHAT THE EU AND UK NEWS
DID TO OUR MARKETS WITH BREXIT
STILL A MAJOR QUESTION MARK AND
YES, IT HURT OUR MARKETS PRETTY
DRAMATICALLY.
JOINING US IN THE DISCUSSION IS
PETERSON INSTITUTE PRESIDENT
ADAM POSON WHO SERVED A
THREE-YEAR TERM AS AN EXTERNAL
VOTING MEMBER FOR THE BANK OF
ENGLAND.
ADAM, ON A DAY LIKE THIS, WE ARE
DOWN 452 POINTS, WHAT IS IT
ABOUT BREXIT AND THE PROBLEMS IN
ITALY THAT ARE AFFECTING AT
LEAST PART OF OUR MARKETS RIGHT
NOW?
>> GLAD TO BE WITH YOU ON A DAY
WHEN THERE'S SO MUCH NEWS FLOW
AND SO MUCH GOING ON.
I THINK WHAT WE ARE SEEING IN
BOTH BREXIT AND ITALY AND
ACTUALLY PROBABLY MORE SERIOUSLY
IN ITALY IS GENUINE PROBLEMS THE
EURO AREA CANNOT OVERLOOK AND
THAT POTENTIALLY AFFECTS THE
DOW, THE NASDAQ, BECAUSE IT
MEANS A WEAKENING OF THE EURO
AGAINST THE DOLLAR, PERHAPS
PRECIPITOUSLY, IT MEANS LOSS OF
VALUE FOR PEOPLE HOLDING
EUROPEAN SHARES.
THERE'S A LOT OF RISK HERE.
BREXIT, AS YOU MENTIONED, TWO
AND A HALF YEARS AGO, THE VOTE
CAME, WE ARE NOW COMING TO
CRUNCH TIME.
IF THEY DON'T HAVE A DEAL WITH
THE EU BY THE END OF THE YEAR,
IN PRACTICAL TERMS THERE'S NOT
GOING TO BE A DEAL.
IT'S BASICALLY ALL OR NOTHING.
THEY WILL EITHER DECLARE WHAT
THEY CALL A LONG TRANSITION
WHICH MEANS THEY ABIDE BY THE EU
RULES NO LONGER HAVE ANY SAY
WHICH IS NOT POLITICALLY
SUSTAINABLE FOR THE UK, BUT IS
ECONOMICALLY VIABLE, OR THEY GO
THE OPPOSITE END.
THEY PULL OUT COMPLETELY.
THEY PROBABLY MAKE SOME DEALS TO
KEEP THE AIR PLANES FLYING INTO
HEATHROW, THE NUCLEAR PLANTS
OPERATING, BUT YOU GET HUGE
BACKUPS OF TRADE AND GOODS AND
SERVICES.
YOU GET DISTRESS OVER THE IRISH
BORDER WHICH SUDDENLY REAPPEARS.
YOU GET LACK OF STANDARDS.
YOU PUT ALL THAT TOGETHER, THERE
IS A REAL SHOCK THAT'S GOING TO
BE RESOLVED ONE WAY OR THE OTHER
IN THE NEXT FEW WEEKS.
THEN YOU'VE GOT ITALY --
SORRY -- ITALY IS MUCH WORSE NOW
THAN IT WAS A FEW YEARS AGO.
LIZ: ITALY IS JUST A COMPLETE
QUAGMIRE AT THE MOMENT, BECAUSE
YOU HAVE THIS COALITION
GOVERNMENT THAT IS PUTTING FORTH
A BUDGET THAT IS WAY TOO MUCH
SPENDING.
BUT I DO HAVE TO MENTION QUICKLY
THAT BOTH THE DOW AND S&P HAVE
NOW REVERTED TO DOWN, THEY ARE
TURNING RED FOR THE YEAR.
WE HAVE LOST WHATEVER GAINS WE
HAD.
AT THE MOMENT WITH THE DOW OFF
THE LOWS OF THE SESSION, BELIEVE
IT OR NOT, DOWN 401 POINTS, IT
DOES I KNOW SEEM ODD TO BE
TALKING ABOUT ITALY BUT LET'S
BRING IT FORTH TO OUR AMERICAN
INVESTORS HERE.
YOU HAVE ITALIAN BANKS WHERE
SOME U.S. BANKS MAY HAVE A
LITTLE BIT OF EXPOSURE, BUT IT'S
NOT THAT.
IF ITALY WERE TO TURN TAIL AND
START MAKING ALL KINDS OF NOISES
ABOUT LEAVING THE EUROPEAN
UNION, WE'VE GOT OURSELVES
ANOTHER BREXIT OR ITALEAVE AS
THEY CALL IT, RIGHT?
>> YOU PUT YOUR FINGER ON IT.
THINGS ARE DIFFERENT THAN TEN
YEARS AGO.
WE DON'T HAVE THE HUGE
INTERLOCKING BETWEEN U.S. FUNDS
AND WHOLESALE BANKING IN EUROPE.
ALL KINDS OF FINANCIAL TREMORS
ARE LIMITED.
BUT THIS GOVERNMENT IN ITALY IS
VERY DIFFERENT FROM THE LAST
SEVERAL GOVERNMENTS, EVEN THE
BERLUSCONI GOVERNMENT.
THEY ARE ACTIVELY ANTI-EU.
THEY WANT TO CHALLENGE THE EU'S
LIMITS ON BUDGETS.
THEY ARE TALKING ABOUT STUFF
THAT COULD POTENTIALLY BREAK THE
BANK FOR MANY, MANY YEARS.
LIZ: THEY DON'T CARE.
THEY DON'T CARE.
>> THEY DON'T CARE BUT AT SOME
POINT THE MARKETS ARE GOING TO
MAKE THEM CARE.
LIZ: WE'LL SEE.
I DO HAVE TO ASK YOU THIS.
PRESIDENT TRUMP, WHO HAS BEEN
REALLY PILING IT ON JAY POWELL,
HEAD OF THE FEDERAL RESERVE,
WHOM HE PUT INTO PLACE, GAVE THE
"WALL STREET JOURNAL" AN
INTERVIEW JUST YESTERDAY AND
SAID WHEN ASKED WHAT IS THE
NUMBER ONE BIGGEST THREAT TO THE
U.S. ECONOMY, AND THE MARKETS,
OF ALL THINGS HE SAID THE FED.
WHAT DO YOU THINK HAPPENS HERE?
YOU HAVING BEEN AT THE NEW YORK
FED, TELL US YOUR THOUGHTS ABOUT
THIS.
WE ARE STARTING TO SEE THE
WAGONS CIRCLE.
YOU HAVE THE DALLAS FED
PRESIDENT COMING OUT SAYING WE
ARE FINE, WE SHOULD STAY ON
PATH.
NESTER OF CLEVELAND SAYING WE
SHOULD CONTINUE.
WE DON'T SEE A RECESSION ON THE
HORIZON HERE.
>> NO.
YOU ARE GOING TO HEAR MORE OF
THAT.
TOMORROW THE NEW VICE CHAIR FOR
MONETARY POLICY OF THE FED IS
SPEAKING AT THE PETERSON
INSTITUTE.
WE WILL STREAM IT LIVE.
I HOPE FOX BUSINESS WILL BE
THERE.
HE, I'M SURE, I'M GOING TO ASK
HIM THE QUESTION, I'M SURE HE
WILL CIRCLE THE WAGONS, AS YOU
PUT IT.
THE DANGER IS IF THERE'S REAL
WEAKNESS IN THE ECONOMY, THE FED
MAY BE RELUCTANT, A LITTLE
SLOWER TO PAUSE OR A LITTLE
SLOWER TO CUT RATES BECAUSE THEY
DON'T WANT TO BE SEEN AS CAVING
IN TO THE PRESIDENT.
BUT BASICALLY THEY CAN IGNORE
HIM.
IT'S CONGRESS THAT THE FED
WORRIES ABOUT, NOT THE