On Thursday, Peter Navarro showed up on Fox Business to chat with Maria Bartiromo about the tariffs, the economy, the dollar and to defend himself against an Op-Ed penned by the Wall Street Journal’s normally Trump-friendly editorial board that carried the rather unfortunate title “A Navarro Recession?”
Peter parroted the usual talking points and Bartiromo, apparently having a flashback to a time when she was some semblance of credible, actually pressed Navarro on a number of contentious issues.
All in all, it was your typical Navarro experience, and for the uninitiated, that is not a good thing.
Because that went so “well”, Peter decided to make another cameo on business television on Friday.
To be clear, just about the last person markets wanted to hear from as the closing bell sounded on an extremely tumultuous week was Navarro, but CNBC entertained him anyway. Predictably, he took the opportunity to lob accusations at China, as if everyone hadn’t had enough aggressive trade and currency banter.
“Good afternoon, Sara”, a bedraggled Navarro began, addressing the network’s Sara Eisen, who wasted no time in reminding him that this week was “crazy” and “volatile”.
“How much farther are we now, Peter, from a deal”, Eisen wondered. “Well, well, look”, Navarro stammered. “The Dow ended up for the week”.
Actually, no, it didn’t, but listening to Peter in the clip below, he obviously meant that stocks managed to recoup the lion’s share of what were, at one juncture, grievous losses, so we’ll give him the benefit of the doubt.
(If the video does not load, please refresh your page – CNBC article here)
As you can see, Peter is “bullish” – on anything and everything having to do with Donald Trump and the US.
That’s its own punchline (because what else is he going to say, right?), but the real laughs came when Navarro was pressed on one of the most important points that is lost on the vast majority of Americans – namely that while the US insists China shouldn’t “manipulate” its currency, the fact is that if the PBoC hadn’t leaned into the fix and counter-cyclical adjustment factor over the course of the last year, the yuan would almost surely have breached the 7 threshold it crossed on Monday a long time ago.
In other words, China’s “manipulation” has, at various intervals, been in the service of keeping the currency stronger, not weaker.
Take Tuesday for instance, when, in the wake of Monday’s carnage, the PBoC set the yuan stronger than expected in order to help calm things down. “We note the PBOC employed the largest-ever countercyclical factor this morning with the daily CNY fixing 586 pips stronger than a formula using the previous day’s close and overnight broad USD move would suggest, a signal that policymakers want to avoid a sharp depreciation”, Goldman wrote.
Wilfred Frost broached this subject on Friday and Navarro attempted to contend that because the yuan has depreciated since the tariffs were put into place, that’s evidence of “manipulation”.
Of course, that’s not necessarily the case. We’ve been over this a thousand times if we’ve been over it once. Recall the following excerpt, from a Monday note documenting how far the yuan will need to fall to offset the next prospective rounds of US tariffs:
As ever, the whole charade is maddeningly circular. The threat of tariffs (and their imposition) prompts currency weakness as the market anticipates a hit to growth and a monetary policy response. The Trump administration then points to that weakness as evidence of “manipulation” despite having played a role in causing it both actively (by hitting other countries with tariffs, thereby denting their growth prospects and raising the odds of looser monetary policy in other locales) and passively (by juicing the US economy with fiscal stimulus, thereby exacerbating the divergence between the economic fortunes of America and its trading partners).
Frost was going to let Navarro slide, but Eisen was having none of it. “So we put on tariffs of 10% of their exports and they devalued by over 10%… so clearly they’re manipulating their currency”, Peter said. “Hang on, hang on”, Eisen interrupted. “Why is that ‘clearly they’re manipulating?'” Here’s the clip:
“If you put tariffs on another country that is [already] slowing their growth and their export and manufacturing sectors worse than ours, then that would argue for a weaker currency”, Eisen said, correctly.
Let’s watch again as Navarro tries to process that and, for comedic effect, let’s watch it in slow motion, shall we?
Right. Thanks, Peter.
Not to put too fine a point on it, but that is what journalists are supposed to do when confronted with officials peddling false narratives and misinformation. You’ll also note that when Navarro suggests the PboC “put the smoking gun in its own mouth” by pledging to keep things generally under control, he’s being somewhat disingenuous. Beijing was effectively promising not to let the yuan fall too far after the initial warning shot at Washington.
While Navarro’s stuttering and frustration is certainly amusing in and of itself, and while it’s a beautiful thing to see the administration taken to task when it comes to the trade and currency wars, the most important thing about that clip is the actual point that Eisen makes.
Market watchers are well-versed in the nuance of this, but the vast majority of the voting public knows little to nothing about the situation, which means large swaths of the electorate are doubtlessly taking the administration at its word when it comes to every accusation leveled against the Chinese.
Finally, it’s always important to note that Navarro does give voice to some legitimate concerns about China’s notoriously exploitative trade practices. The reason we (and plenty of others) are so hard on the administration is that thanks to their penchant for not telling the whole truth (if they tell any of it at all), it’s necessary to constantly hold their feet to the proverbial fire, lest soft propaganda should be allowed to simply spread unchecked.
Read more on the burgeoning global currency wars