This is a rush transcript from "Your World," October 11, 2019. This copy may not be in its final form and may be updated.


I'm Neil Cavuto. And, like you, I'm a little stunned and a little heartbroken. I don't know what to say.

Shepard Smith, as I said just a few days ago on this very network, a decent human being, a heart as big as Texas. I didn't say Texas at the time. Maybe just all of Manhattan.

Wow. I don't know. A better newsman, you probably cannot find. Again a bigger, more emotionally connected to humankind you cannot find.

So, Shepard, I don't know what the heck you're planning to do or where you go, but I just know you will be great at doing it. And you deserve the best that life has to offer.

So, I'm sorry if I'm a little shell-shocked here, but I'm going to miss my buddy.

All right, on to the news at hand, as Shep would say, because breaking news does change everything.

And we have got a lot of it going on right now, including a trade truce that is on and stocks that are, well, just taking off.

The word right now of a tentative deal is sending the Dow up about 300-plus points, although it had been up more than 500 points at one point.

Now, the president is in the Oval Office. He is with the vice-premier of China. He is also with his treasury secretary, his trade ambassador. They're all gathered in there. He is taking questions from reporters about all of this on a day where the markets seem to think that a truce is better than nothing. And this looks like a substantial truce, at that.

So I want to get to read from John Roberts at the -- at the White House on all of this.

John, I apologize for being a little shell-shocked on this other development here, but take it away, sir.

JOHN ROBERTS, CHIEF WHITE HOUSE CORRESPONDENT: I have just been trying to compile my thoughts too, Neil.


ROBERTS: I walked here to do the hit and suddenly got hit by a subway train. Holy mackerel.

Let's try to get to the news at hand, as I digest the other news that we just heard. Oh, my God, that's completely shocking.

The president with Liu He, who's the Chinese vice premier, in the Oval Office. Yesterday, the president seemed to indicate that things were going well in terms of trade talks with China.

When the treasury secretary, Mnuchin, was in the Briefing Room just a little while ago, he was saying that things were looking good.

There you see Liu He coming over from the U.S. trade representative's office to the White House.

I asked Secretary Mnuchin. I said -- excuse me -- the stock market seems to like what it's hearing. And he said the stock market's always right.

You pointed out there, though, that the stock market was up about 100 points higher than it is, so maybe they were expecting more than what we seem to be seeing out of the Oval Office. Or maybe this is just tempering expectations. We don't know.

But the president did say, as you can hear his helicopter landing behind me as he's about to take off for Louisiana -- he said: "We have come to a very substantial phase one deal. The deal is getting written. It will take some three to five weeks to do."

They have come to a deal on intellectual property, which was one of the three big pillars here in terms of getting a new deal with China. They have also come to an agreement on financial services, as well as currency.

China apparently is going to buy some $40 billion to $50 billion in agricultural products, which may be either 20 or 30 million metric tons of soybeans, also buying some pork. We're getting conflicting figures on the number of tons, not as much as they bought in 2016, but more than they bought in 2017 and 2018.

This thing is all just a -- it's in the works right now. We're going to hear more from the president coming out in just a few minutes, when that recording gets handed off to the pool, Neil.

But on the surface, at least, this doesn't look like the grand bargain that the president was looking for initially. He talked, he sort of alluded to earlier this week the idea that they might get some sort of a partial deal in place. He said it's not his preference. He wants to get a big deal.

But China apparently has blinked a little bit. They were under the crushing, punishing weight of those sanctions. They have asked for a respite in sanctions. Steve Mnuchin said that sanctions that were scheduled to go into effect on October the 15th, this coming Tuesday, which were originally going to be imposed on October the 1st, but the president gave a pause because of China's 70th anniversary, those sanctions will -- or those tariffs, rather, will now not go into effect on Tuesday.

We do not know about the other tariffs that are expected to go into place, are scheduled to go into place on December. But for the moment, it looks like the temperature is coming down in this trade war. It's off of a rolling boil. It's now down to a simmer and may begin to cool even further from here. We will see.

But we got to wait for the playback to find out exactly what was said in that meeting -- Neil.

CAVUTO: All right, John Roberts, thank you very, very much.

And before I gauge reaction from my guests, I -- I can't ignore the elephant in the room, and the elephant who is leaving the room, Shepard Smith leaving this network after 23 years.

He's one of the originals, as am I. He just didn't age. I did. He didn't gain a pound. I gained maybe five pounds.



CAVUTO: Why are you laughing?

So, I'm, with you, a little shell-shocked at this. So I apologize if I'm not my normal razor-sharp self.

But let's get reaction, not to the Shep news. I'm happy for him. Now, don't get me wrong. I'm just a little bit bummed, selfishly, for myself.

All right, Jillian Melchior joins us, Kelly Jane Torrance, and FOX Business' Susan Li.

Susan, I end it with you, begin with you, on the markets maybe reassessing this trade deal. It's still a very big amount...


CAVUTO: ... up 319 points. We had been up over 500. What are they sort of churning over?

LI: I think they're churning over the details. As you know, the devil is in the details in any agreement.

And this is a feel-good pact, because it's not the grand bargain that to President Trump and probably the markets were looking for. But it's better than what it was. And tariffs don't go up this month. They don't go up in December.

And you have some sort of agreement. We're back to China buying soybeans and agricultural products once again, giving more market access to financial firms. And the fact that they are starting with a better foundation, I think, is positive going into the future.

CAVUTO: So where do we go from here, Jillian? The president spelling out the particulars as we speak in the Oval Office right now with the vice premier of China, so we will get a better idea of this. And this could go on for a while.

But he is optimistic that this is a substantial deal. That's what obviously many who were waiting for this the better part of the year-and-a- half wanted to see, right?


I mean, I think the devil, again, is in the details, but this is some encouraging relief for the markets. We're headed into holiday season. You have got tariffs about to take effect that will affect a lot of Chinese toys coming into the U.S., so that's something that affects every household.

So I do think that the pressure is on to get a deal. And we have got to keep in mind, with the agricultural goods, this is something that's helping -- and if there is relief, it's helping many of Trump's constituents in the Farm Belt.

So I think the politics here are also a pretty important consideration.

CAVUTO: All right, just to be clear -- and I know these are fast-moving developments -- the tariffs are delayed now. They won't take effect, as they were, next Tuesday. So that staves off what would have been higher tariffs on better than $250 billion worth of goods, and, if you extended them out to mid-December, $350 billion worth of goods.

But, Kelly Jane Torrance, now the question becomes the trust, but verify Ronald Reagan line, that, whatever China does, we have tangible proof and I guess a means by which we can hold them accountable. What do you think?

KELLY JANE TORRANCE, SPECTATOR USA: Well, that's a -- that's a great point, Neil.

And I have to say, also, I'm feeling your pain. I think millions of us are going to be missing Shep Smith when he's gone.

But, yes, as Susan said, the devil is in the details. And then, after that, will those details actually take effect?

Now, you remember, we were talking a few weeks ago, because Donald Trump said he is only going to make a big deal with China, in other words, a deal that included intellectual property, currency manipulation, all of those things.

And I started worrying. In the last week or so, he was backing off that. And we still don't know how big this deal is. He said it's substantive, apparently. But he also said it was phase one.

It's supposed to include some intellectual property protections and some stuff on currency manipulation. So you're right. These are huge things that China has been reluctant to do anything on, basically, since the communist regime took power and opened up its economy.

So I think we do need to verify, for sure. And I think -- I will say though, I'm glad that -- I think Donald Trump was anxious to make a deal, take some heat off of him for the impeachment, have people talking about something good, especially going into 2020. The trade war is the only thing really that's the big negative in the economy.

And I was worried he would just get a quick deal, anything he could get. So I'm happy to hear intellectual property is a part of this, because the trade deficit, we know that doesn't really matter that much. What matters is Chinese companies using American technology because the Chinese government has either stolen it or forced American companies to hand it over.

CAVUTO: All right guys, I want to thank you all very, very much.

We're waiting for the president. He's still talking in the Oval Office about this. Some of the things he's saying is that China is responding on a currency pact. They apparently committed themselves to buying more farm goods. Didn't spell out exactly how many more farm goods or whether it would get back to the levels before we had this trade war bubble up almost a year-and-a-half ago.

He talked about the fact that they did discuss Hong Kong, that great progress is being made in Hong Kong, and that the Chinese have toned it down a bit, that this would be beneficial to the economy as well.

The president saying that: "I think it will be tremendous for China, what we have been doing well, and I think we will do better."

So, we're on top of that, waiting to hear from the president.

And we here at FOX are still trying to assess one of our best and brightest going on to bigger things, happier things, more personally rewarding things.

I can only wish Shepard Smith the very, very best for the 23 years, quarter-of-a-century we have known each other. It has been a pleasure and an honor.

We will have more to this.


CAVUTO: A couple of things happening on Capitol Hill today on the impeachment front.

To Mike Emanuel in the middle of all of that -- Mike.


Former Ambassador Marie Yovanovitch is someone Democrats have been eager to talk to. She arrived here on Capitol Hill about six hours ago. She's a career diplomat, spending about 33 years in Foreign Service.

In her opening statement obtained by FOX News, Yovanovitch said -- quote -- "I was nevertheless incredulous that the U.S. government chose to remove an ambassador based, as best as I can tell, on unfounded and false claims by people with clearly questionable motives."

Earlier, a top House Intelligence Republican said she was biased against President Trump.


REP. DEVIN NUNES, R-CALIF.: This is somebody that wasn't just supporting the Clintons when Clinton was running, telling the Ukrainians that Clinton was going to win, prognosticating about it, but, also, once Trump won, was bad mouthing the Trump administration in Ukraine to Ukrainians and State Department staff.

So she's got a lot to answer for. We're looking forward to questioning her this morning.


EMANUEL: Also, today, a U.S. appeals court siding with House lawmakers' request for the president's financial records. The president's team was trying to block the accounting firm from handing over the information.

Speaker Nancy Pelosi applauded the 2-1 decision and the U.S. Court of Appeals for D.C., saying -- quote -- "It is a victory for our democracy, as the courts reaffirm the Congress' authority and responsibility to conduct oversight and consider legislation on behalf of the American people."

Pelosi says: "Congress will continue to protect our democracy" -- Neil.

CAVUTO: Mike, thank you very, very much.

So, where does the tax fight go right now? Because the president could take this all the way up to the Supreme Court of the United States.

John Pavia joins us right now, the former prosecutor, professor of law over at Quinnipiac.

What do you think? Where does this go?

JOHN PAVIA, QUINNIPIAC UNIVERSITY: Well, I think the president's in trouble. I mean, I really do.

Now, this decision, I think, in my opinion, Judge Rao, who wrote a dissent -- remember, this is the court of appeals for Washington, D.C., the D.C. Circuit. This same court found back in the Watergate hearings that the Senate committee investigating Watergate could not enforce a very similar kind of subpoena.

However, they did say that the House of Representatives is endowed with investigating the president for wrongdoing. It's called an impeachment.

I think what happens from this, Neil, is Nancy Pelosi -- this prompts the House to actually take an official vote to empower the Judiciary to officially investigate the president for impeachment. If they issue the same subpoena, I think it would get enforced.

I think, eventually, he's going to have to turn these records over. And as you and I have talked about before, it's all about the Southern District. It was never about Mueller.


CAVUTO: Yes, I remember at the outset you were saying that, while everyone pays attention to the Mueller probe, he had much more to worry about -- Chris Christie, the former governor of New Jersey, agreed with you -- in this Southern District probe.

It's the Southern District that wants this stuff, right, and the Southern District that they go back and forth as to get stuff.

Now, are you saying that, if you have a formal impeachment probe or inquiry launched by the House, this supersedes, then that he has to hand these over to a House committee? PAVIA: Yes, I think -- I read the decision -- I have it right here -- that came out today.

And I think the dissent has it right, which is, if the -- when -- the legislature has the power to issue subpoenas for the purpose of furthering their legislative function to create laws, so they have the power to issue investigative subpoenas.

However, this court said over 20 years ago, maybe more -- my decade is wrong.

CAVUTO: Right.

PAVIA: That, in the context of potential wrongdoing by the president, if you want to look into that, it's the House that has responsibility, and it has to be within the context of an impeachment.

And in that case, I think what happens here is, they issue the -- this Judiciary Committee issues almost the same subpoena, and it would get enforced. But I think this case is going up on the Supreme Court. The Supreme Court almost has to take it.

And it's going to be a very -- it'll be another monumental decision.

CAVUTO: Why do they need to tax records again? Ostensibly, it was to cross-reference payments that were made and what tax forms they were on.

But the White House said it was a very specious argument.

PAVIA: And that's exactly right, right?

So how does this further the legislative function, which is, Judge Rao, in his (sic) dissent, that's the question he (sic) asked.

So -- and I think that's the right question, by the way. If this goes up on appeal to the Supreme Court, my sense is, given the dynamics of the court today, I think the court says -- asks the same question, comes out the same way.

CAVUTO: Which is what?

PAVIA: There was no legislative function here.

CAVUTO: So you can't get it?

PAVIA: So, it was too tangential.

CAVUTO: But it's different with an impeachment call.

PAVIA: Now -- right.

So, at the same time, I wouldn't be surprised if they say, look, the wrong committee issued this subpoena. Now, let's assume for a second that the Judiciary, in the context of an impeachment investigation, tomorrow issues the same subpoena.

I can see the court saying, the first one was wrong, the first -- the one that got upheld here, but the one that got subsequently issued by the Judiciary, they will uphold that one. They will have to turn over those records.

And that's where, going back nine months ago, when you and I talked about this, and Governor Christie, I think there's -- there's lots of danger there. And I think -- the other thing I will say is, I think with what's going on with the indictments against Rudy and -- I'm sorry -- against the two associates of Rudy Giuliani, there is a motion -- there is practice.


PAVIA: There's folks who know how to manage through the rules of impeachment. The president needs to go on the offensive here.

And I don't know that his legal team is as focused as it...


CAVUTO: Well, you mentioned going on the offensive.

And we got the two-minute warning from the White House when this tape will be available. He has just wrapped up speaking with reporters.

He has argued he's not going to cooperate with what's another -- a second witch-hunt. If they called for an immigrant, Nancy Pelosi calls for that, and it's voted on and approved, does he have to? Does that change things?

PAVIA: Well, I think he ends up having to hand over these documents, right?

CAVUTO: But, you know, his fear is, you hand over tax documents, then that gets leaked out.

PAVIA: Oh, it's terrible.

So, let's go to another segment that we did. He's getting impeached. I mean, I don't think there's any two ways about it.


PAVIA: In the House.

CAVUTO: Doesn't necessarily mean...


CAVUTO: Right.

PAVIA: But it -- and then it's going to go over to the Senate.

CAVUTO: Right.

PAVIA: There will be a ceremony. They will walk them over. And there's a real ceremony.

Then the senators take it. And, there, they now try him with the chief justice, right.

CAVUTO: But you need two-thirds of them.

PAVIA: You need two-thirds, right?

So, today -- and you and I had this conversation. I said that Trump was more like Clinton than he was Nixon. Nixon really faced criminal charges and the threat of going to jail. His only bargaining chip was the presidency.

That wasn't Clinton, right? He was never going to jail.

CAVUTO: Right.

PAVIA: Trump, when we talked nine months ago, I said was more Clinton than he was Nixon.

As we sit here today, he's somewhere in between. And he's moving more towards Nixon. And that's where these records that came out of Michael Cohen's office and everything that's up here in the Southern District, that's what he needs to worry about, real criminal exposure, which then gives them, the other side, incredible leverage.

And that's where he becomes more like Nixon than he does Clinton.

CAVUTO: The eight years in question, obviously, that's what they're looking for, in that time frame.


PAVIA: So, who knows what's in there.

CAVUTO: John, you have been proving prescient on a lot of this stuff, John Pavia.

I remember, in the middle of the Mueller stuff, he was just saying, don't focus on the Mueller stuff. Focus on what's happening here in the Southern District of New York. And that is coming true and getting to be a nightmare for the president.

He just wrapped up speaking with reporters a while ago to talk up a trade deal that he hopes, no doubt, people will focus on, and not so much these impeachment developments.

Now the president.


CAVUTO: All right, there you go. The president has already made it clear the trade deal is on.

Reaction right now from Washington Examiner's Tiana Lowe. We have got the GOP strategist Lauren Claffey, and Democratic strategist Kristen Hawn.

Tiana, to you first.

This idea that it's going to be a trust, but verify thing, to use an old line from Ronald Reagan, when it comes to the Chinese sticking to this deal, but if they do, it's a big deal, isn't it?

TIANA LOWE, THE WASHINGTON EXAMINER: I mean, markets have obviously rallied as a result of the -- of the framework of this deal.

The deal itself, as Trump described, isn't a terrible deal. However, mind -- the only reason why Trump needed this installation in the first place was because of the threat that he posted on Twitter a couple of weeks ago.

So, I mean, the key here will be Trump not putting his foot in his mouth virtually on the Internet, and blowing up negotiations, as they commit this into writing.

That being said, this could prove to be a major victory for the Trump administration, if it manifests itself as Trump said earlier.

CAVUTO: Yes, a lot depends on what the Chinese do to follow up on commitments to buy more agricultural goods, to make good on working with U.S. companies, for whom, in the past, they have been charged with stealing information. But that's the detail part of it.

Lauren, how do you think it goes?

LAUREN CLAFFEY, REPUBLICAN STRATEGIST: Yes, you know, I think it's going to be -- we're going to have to wait and see how much is put on paper, what the actual agreement looks like once it's finalized.

But I agree, I think it's a really good first step. I mean, Trump, with the threat of the additional 5 percent on tariffs, kind of, it was a good pause. They made China blink a little bit, just enough to make some progress in the trade negotiations.

And I was surprised to hear Trump insinuate that there could have been planes and ships and other things, insinuating that there may have been some escalation militarily if this had not gone through, since you have the two largest economies. I think that might have been a stretch. I hope that wasn't the case.

CAVUTO: Yes, that was a little -- that was a little -- that scared me a little bit here. But...

CLAFFEY: Yes, that scared me a little too.

CAVUTO: Kristen Hawn, I'm just wondering.

You know, the president was hoping that this would take attention away -- and this is an achievement, if it comes to pass. But the impeachment bugs are still crawling around in here.

And now, with the pursuit of his tax records and others testifying, whether the president wants them to or not, I mean, you have these concurrent crises for him, no?


I mean, I don't think this will totally take the limelight off the impeachment and all the other crises that he has going on.

In many ways, I mean, it is an accomplishment for the president, maybe. We're not quite there yet, obviously. And there's a lot that can happen in the next several weeks, depending on the president's actions.

But, in a lot of ways, I think he's solving a crisis that he created by creating this trade war with China.

But I think that there's -- there's a lot going on. On the flip side, the Democrats say it all the time, that we can move forward with an impeachment inquiry and still get things done.

So it's good to see that. It's good to see that we're still moving forward with important negotiations with China and on other important policies that impact our economy at home.

CAVUTO: You know, all this other noise around the impeachment stuff and everything else, I mean, we had a guest here who says, at least, Tiana, in the House, it looks like he could still be impeached. It might not go anywhere in the Senate.

But it is interesting how this could all play out on Capitol Hill, with landmark trade deals, to hear the president tell it, and Democrats' landmark impeachment moves.

LOWE: Yes, I mean, I totally agree.

And it's really interesting to see how this is all going on, not just with trade deals. But you have got this impeachment stuff happening. But there's significant back-channeling right now with the White House, and in an earnest way, with the Democrats in the House on drug pricing.

And so I think that they have shown a willingness to work together. But you never know with the president. When the impeachment itself comes to a head, he's always the decider here.

So -- but there are conversations going on, on a number of issues, between staff at least, on the staff level, which is encouraging.

CAVUTO: All right, guys, I want to thank you all very, very much here.

Just a final few words, if I may, in the last 30 seconds we have about my friend and colleague of some 23 years, Shepard Smith, leaving this network.

He defined this network in the early days, as a reporter second to none, and a journalist who always tried to get the story right and hold truth to power.

And, of course, there's always the back and forth between, you know, those conservatives who get upset, liberals who want to know more.

And we politicize everything, so I can only talk from the human being perspective. A damn good one.

We'll miss you, Shep.

Here's "The Five."

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