tv Wall Street Week FOX Business April 2, 2016 12:30am-1:01am EDT
ed rollins and michael goodwin are among lou's guests monday. have a great weekend wherever you are. for now, good night from new york city. >> announcer: this show has never been solely about investments. we talk about anything that affect people and their money. from fox business headquarters in new york city, the new "wall street week." >> welcome to "wall street
week," i'm anthony scaramucci. gary: i'm gary kaminsky. with the market clawing back and then some. two of the handlists from the original wall street week. chairman and ceo mario gabelli and liz saunders. mario, what your outlook? >> the corporate economy will do well in the united states. >> dead is 14.3 trial. jobs are plentiful. wages are rising. but i think the consumer sector is okay. more importantly, we as a country consume 20 million barrels of oil. the price is down $50. somebody is saving $1 billion a day and that is working its way
through the system slowly. i'm optimistic about the u.s. economy. europe will do bert in 2017, and i think that will help a lot of corporate profits and unfold in the second half of this year. gary: for viewer, what happens in january. why was there such a fear of recession and why did it have such an impact on the markets? >> you go back to the fall of 2015. the impact on energy, mining and the american industrial infrastructure and the fact it could ripple over and the number for the consumer weren't as strong. as a result there were those who said there is going to be a recession and we want to sell anything that's leveraged and the concern over high yield through the oil ecosystem and the impact it would have on funding and the debt structure.
it all came together and somebody said there will be a higher probability of recession. somebody said fire, sell your stock and get out of the market. that's the way the free markets should work, and there is the china syndrome. anthony: do you think there is a recession on the horizon? >> you have to think about which indicators were flashing red. you saw it in the volatility and the equity market. there is a reason for the well-worn phrase. unless they are confirmed by the high frequency leading indicators, economic iicators, i think it was yet another false signal. even when the crescendo was greatest we didn't buy into the recession case. gary: should investors be concerned that what appears to
have happened in march was the fed said we won't raise rates in the short term, we are going to keep steady. is that something we are becoming so accustomed to that it's a long-term problem? >> what we are in now is bca coined the phrase the fed policy loop. strengthen the dollar which leads to a blowout in credit spreads which leads to higher volatility in the equity market which has the effect of tightening financial conditions. we have been in and out of that loop since about a year ago where it suggested the fed was going to move in september, they tightened in august, they loosened in october-november and aloud them to tighten in december. and we are in this back-and-forth mode as it relates to fed policy. a lot of people misinterpreting the fed reacting to market
events. they are reacting to conditions loosening and tightening which arguably an appropriate thing to do. >> in the global economy you have $26 trillion. america is 24%, and china and japan are at 24%. how quickly can china go to a consumer-led economy. 20% of their economy is the consumer. anthony: do you think we are in a stock-market tied-in world. >> if the 10-year bond goes to 3%, the market will be hit. how quickly will the 10-year bond adjust? the margin of safety at the stock markets at these levels. gary: you beat the indekss, that's what you try to do. where should we look? >> the u.s. military has under
spent, and when you have our allies in japan and south korea worrying about what's going on in china and europe. i want to own companies that will benefit for basically reconfirming america's role in the global safety net. and stock specifics in that. you have companies obviously like honeywell. but i'm also look at companies that aren't as visible. mike textron. but they are more tied to helicopters. then you have companies like command which make tapered roller bearings and bomb fuses. those are the types of companies one looks at. the second area is clear to me. health and wellness. how do i as a consumer get rid of antibiotics i want organic
and natural and which companies benefit from that. and water. gary: healthcare, wellness, water and defense. >> and cable and content of distribution. anthony: this sounds bullish. are you bullish? >> i think we are in a second bull market but a more mature faifts it. we are generally trending higher but with a lot of violence. i think that's the environment in which we stay in the near term.
and liz anne saunders. and i would like to bring in harris. in six months we'll know hot next president is. what's in stake for the markets? >> right now nothing yet. recent data looked at u.s. stock market correlations to poll numbers for the current candidates and primary results of the different candidates. there doesn't seem to be a pattern. i think it's a peripheral contributor to volatility. but when you have two candidates putting formal policy proposals, it becomes a bigger needle mover for the mark its. gary: who does the markets wants to be the next president or do they care? >> probably nobody. right now it's all the fed. the fed is keeping everything afloat on that sea of liquidity. probably from the who do we
ow, thehilly they probly el me coortae wi tha but don'thinthe rket are amor witany the ople >> y hava rerend on e u.k.n ju 23 at wld ban emenof uertaty ithe rket ne ruireany e grt itaiis tnkinabou itinthe rope ecomic ion. >>hat uld an emenone would focus on more intensely than the election. tax, will we reform taxes and make it u.s. competitive again? and what impact will that have on the earning and will the house and ways committee be able to do a major change and will that take effect in 2017? anthony: who has a bert chance of doing that? a democratic or republican president? >> if bind and warren are the
candidates on the democratic side i'm not as convinced. anthony: that was a wildcard you threw in there. >> if it's more conventional thinking either -- anthony: is the market repaired for that sort of wildcard? >> in the last 110 years the market has gone from 60 in the dow to 17,000. and we have had some good presidents and pad. the american system of allocating capital will continue. it will flourish with a better attitude towards capitalism and the free market system. anthony: some are nervous about the rnc convention, they are pulling out their sponsors. should we be worried about that? >> maybe in the short term in terms of volatility. we have had contested conventions in the past. we shoulden call them brokered
conventions because of what it used to entail. i'm a believer in what mario said. i think the near term is the sir discuss. and cap tellism and capital allocation and the -- capitalism and capital allocation will win over. >> there is an element of confusion on the part of consumer because of the extra -- because of the extraordinary focus on the election by the media. gary: you think once we get to two candidates it will have a boost in consumer confidence and spending? >> it will eliminate some of the his -- histronics. >> it shows how the candidates have tapped into the anger that
exists out there. in that regard janet yellen has it right. the middle class has been put upon by globalization. we are sitting in this room, they have been able to take, but they have for 30 years had their wages crushed on a relative basis. it will be how does this play out? and they understand this very well. can they fix it? not by anything we have heard. but we said voices being heard and it wasn't heard. that's why this election is probably a positive. anthony: is it fixable? >> can you fix it or ameliorate some of the pain? union -- private sector unions have born the brunt of privatization. but going forward, i think they heard this loud and clear.
gary: mario, in donald trump's financial disclosure he says he invests with friends and people he respects. it's public knowledge he invested in one of your funds. >> we don't talk about any of our clients. we have many of them. but to the degree prepares reported he invested in an options writing program in a fund that does gold and natural resources. i can't tell whether he picked it or an intermediary picked it. gary: the objective would be to participateq if the prices went up. >> they capture the volatility in the underlying stock. gary: he respects you and calls you a friend because he says he invests with people he respects. >> if nominated i will not run,
if elected, i will not serve. we have a full-time opportunity to take care of our clients. that's the most important job in terms of judgment and service. we have a great passion for our coun when you think about success, what does it look like? is it becoming a better professor by being a more adventurous student? is it one day giving your daughter the opportunity she deserves? is it finally witnessing all the artistic wonders of the natural world? whatever your definition of success is, helping you pursue it, is ours. t-i-a-a.
about china, is the 7% real or fiction? >> i think it's fiction. i'm sceptical of everything that comes out of there. if you don't allow google to freely operate, everything is suspect. i always watch australia. levi sold more canvas and told you more in the picks and shovels. australia slowed dramatically. gary: they are getting the benefit of the growth in china. what are the real numbers? >> from 4.5 to 5. but that's an outstanding number. 5% gdp growth. in 2003 the gdp was 700 billion or 800 billion, now you are at 10 trillion. it's still an enormous number.
>> 40% of china's g -- p is consumption. we think it will grow 10% a year. 6% has a challenge because of too much capacity and that will grow 2 or 3. you have real growth at 2.2 to 5.5 plus inflation. in the "wall street journal" thursday they had a special ad insert for china's need for nuclear just to have power. companies that supply this will be extraordinarily interesting. curtis wright has a westinghouse owned by t to toshiba. and assuming there are no more fukushimas, that would be an interesting tale to a company like that. that's a real growth rate on a global economy.
yra mentioned the 17 trillion global economy so you need that engine. gary: the emerging markets. do you have the china market? >> we are sort of neutral on china. i agree you have to do the full math on the numbers. they are also diversifying their economy. aside from just moving less -- away from investment and toward consumption. they are starting to make significant acquisitions outside of china, particularly in the u.s. that's a benefit to many u.s. companies, too. we are in a better competitive situation. the total land to cost gap has narrowed. and the manufacturing competitiveness. aside from the way politicians focus on that, i think that shift is coming back to the benefit of the u.s. because they had to raise wages. gary: the emerging market was
the big surprise of the first quarter with the bounceback economics. should investors have money in the he mening market? >> we have a neutral rate on the he merging market? it's an important part of a portfolio from a diversification standpoint. activity in he morning market reinforces to investors to not make mistake people often do. market of any variety care more about better or worse if they do good or bad. if they tart getting worse or start to pick up. that's really all you need to see a launch point for an asset class like emerging markets. >> when i look at something in hong kong, i'm excited with it many called mandarin hotels because of the globalization of their brand. i like peninsula hotels located in hong kong.
we have an office in shanghai, we opened one in tokyo. we cover industry globally and they work. gary: mario like the mandarin. anthony: the hen fund guys are short the -- the hedge turned guys have short the currency and they think there will be an economic implosion. >> there is no question they have a question mark about outflows of currency and that had an impact in january. how can they control that? that's a work in progress. >> on february 1, right after that weekend. i said if that story is right, they are looking for 35% depreciation in the yuan, get long gold and long yuan and it will force diversification. gary: have we seen the top in gold?
yes or no. gary: have we seen the bottom in gold oil? >> no. >> short term, there is too much supply. over the next 12 months it start holding solid on west texas crude. and that's very positive for the consumers. gary: liz, oil and the consolidation of the stock fund continue? >> they went into u.s. equities and on the way down with margin calls they were forced out of he can wits. that's one of the reasons that's less discussed for that correlation. anthony: you are bullish, liz anne, aren't you? >> i am. i'm going secular bull market. anthony: that's it for today. our thanks to liz anne saunders,
spina i know it's hard not to interrupt. >> are you disappointed by the likely republican and democratic nominees? >> what difference at this point is a may? john: we have heard so much from the republicans and democrats. now it's time to hear from the libertarians. the three toppling presidential candidate debate here tonight. in our two-part libertarian presidential forum. and now, john stossel. [applause]