tv Wall Street Week FOX Business August 26, 2016 8:00pm-8:31pm EDT
we'll have some great guests coming up after the weekends. have yourself a great weekend and we'll have more great shows for you next week on the lou dobbs show *. show. good night from new york. [♪] >> announcer: this show has never been solely about investments. we talked about anything that affected people and their money. from fox business head quarters in new york city, the new "wall street week." anthony: welcome to "wall street week," the show of record for long-term investing. i'm anthony scaramucci. gary: i'm gary kaminsky. it has not been a summer bummer for stocks, at least not yet.
the markets continue to flow with new highs. anthony: are investors ignoring a buzz saw on the horizon? we are joined by gabriela santos and dan shaffer. august was a so-so month for stocks and september the worst month since 1928. should investors be more cautious than they are right now? >> this has been a good few months and it's justified by better economic data earnings going forward. as we approach september and talk more about an upcoming fed rate hike. we are telling our clients we don't have to be scared of a rate hike. a rate hike would and good thing because it means the economy is solid enough to justify raising rates. gary: anthony mentioned
september and august. can we look back at history where a market is so controlled by the fed, when we think about looking back and thinking ahead? >> i go back hundreds of years in markets. put this into 1928. that's where the federal reserve is now. they manipulated the markets during the 20s and it got out of control. in late 1928 and '29 $lot of investors were shorting the market. a lot of these top guys are hedging and covering their portfolios, or they are not fully disposed. bern majust looking at that timd we are similar.
but the 40-year cycle continues if we look at 33-34. we look at the 1930s, 40 years earlier. 1896. similar cycle. go back to the civil war. 1860. same cycle. we are on the cusp of a major shift in this economy and the stock market and i think it will be brutal. anthony: gabriela how would you rate the health of the u.s. economy? >> that's a tough question. i wouldn't say it's an a-plus. we are seeing weakness in the investment spending side of the economy. however, there are some positives and we would say they are overwhelmingly positive than negative. that comes from the consumer, from housing which is having a very, very good year and
continues to improve. it's tough to put an exact grade. not an a-plus, but not a c either. gary: you say we are at the verge of a major cycle bust. expand on that. >> housing numbers look great but mortgage applications are down. who is buying the houses? hedge funds. private money is buying on speculation and renting them out. homeownership is the lowest since 1965. the price to earnings ratio is low. it signals a problem going back. we also have the issue of debt. the world is fixed that debt fixes problems. but when debt gets to the levels they are today, it becomes dangerous. the report i just saw this week, the four main oil companies, oil
prices have come down so lot we are at record levels of issuing debt. just to pay their dividends. these are parts of the total. put the political picture into this thing and it makes it worse. i'm connecting the dot of similarity with history and the way people behave. right now everybody thinks the stock market will go up forever. you and i have been around this business for 0 years. it doesn't work like that. when you have artificial stimulus. japan is buying etfs. if i told you interest rates would be zero in 2006, you would have laughed at me. alan greenspan in 2004-2005 when the 30-year treasury interest rate was below the 10-year he couldn't understand what was coming. that's what happened in 2008, 2009, 2010.
zero interest rate is telling us we have the potential to go into a depression. that's what it's predict. >> we have to give investors and viewers an idea how to make money. we'll do that after the break. stay with us we'll be right back. >> stocks continue to soar. but could inflation bring it all down? how prepared the fed is to stop it. wall street week after this. ♪
i read that and worry. i knew historically 2/3 of the return on equities is dividend. should they be worried the viewers out there are just buying stocks for the dividend yield? >> we do think it's somewhat concerning if you are purely buying stocks just to treat them as a fix the income. but we need to think about how much are we paying for that dividend. are we overpaying for it? i would argue utility and consumer staples are part of that. and where can the price go? if you are looking for both, dividend yield and capital appreciation there are better places to look than expensive second towards, things like financials, for example. gary: people are buying bond equity substitutes?
>> they can't get yield in the fixed income market. that's a dangerous bubble. the problem is the dividend producers like the dividend producers like the reits and utility will slow down. cars are more efficient, gasoline stockpiles are out. the energy drop is 90% of what the watt and would be. so the you it are not seeing the expansion you need for energy which could crews a problem for the dividend. they are either going to cut their dividend or they will do something to increase their income and i don't see it. i'm concerned about chasing dividend at this part of the cycle. >> you are touching upon something gary and i talk about a lot on this show which is putting pressure on the deflationary environment.
we haven't experienced that in the u.s. gabriela, are you worried deflation will affect the united states? >> no, we are not. we are looking in the more rye zon at an inflationary scenario in the u.s. if we think about the reason inflation has been very, very low, it has been due to the fall in energy prices. if you take that component out there are inflationary processes in the economy. rent, healthcare, education. as soon as energy prices start rebounding we are due to see inflation coming back around 2%. >> one of the cases for higher yielding dividend stocks. they do well in a low inflationary environment. there is a pricing power for those companies. what do you say to that? >> we are in a cycle, the most important part of investing in these vehicles.
my interpretation and my models are showing me we'll go into a deflationary environment on hard goods. but if you look at corn, wheat and soy beans. the farmers are dumping crop on the market because they are having trouble maintaining their farms. our cycle is showing us we'll go into a major food shortage. a food crisis. the investment opportunities are there. so as far as deflation is concerned, the interest rates are telling us that. if they held rates down for this period of time and can't get the inflation going in the general economy, that means there will be a lot of dumping of hard assets. >> i'll push back a little. i see the trends you are describing. one of the problems, and dr. bernanke would say we have
had a drug until the government right now, there is contention about how to get the economy growing. what if the next president, whoever he or she may be incity gaze that. does that change your view? >> that's something the fed is grappling with. how can we get growth back to that 3% pace. and how do we boost productivity. i don't think it answer is as easy as let's spend a lot of money from the government and build bridges to nowhere. there has to be an incentive for the private sector to invest more. it's a combination of fiscal policy and tax reform. >> this is very interesting. my models are showing me trump has a very good potential to win this election. the problem is that he's going to run is to the roadblocks in washington. that's where the issues will be.
the fiscal responsibility will still be a problem. as far as the better candidate web's the better candidate based on the conditions coming. if we get the democratic party in there it will make our country weaker as we'll be spending money like crazy. anthony: more "wall street week," we'll be right back. >> announcer: entrepreneurs are the backbone of america. but nike founder says not everybody is on board. could the business icon do it all over if he started today? and it's the controversy everyone is talking about. the skyrocketing cost of life-saving epipens. liz claman and charlie gasparino weigh in when "wall street week" returns. better buckle up.
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anthony: welcome back to "wall street week." in a few minutes we'll have a special show. gretta van susteren has a special interview with nike founder phil knight. here is a clip we thought deserves some discussion. >> do you think you could do it today? >> i have been asked that a lot of times. it's an entirely different environment now. there is sort of a negativity towards entrepreneurship and business in general going on. in this country which is too bad. but i sight as a cycle, not a trend. but the flip side of that is there is venture capital firms now. so if you have access to money
now that you never even had back in the 60s. so that makes it easier. so you have both sides of that coin. gary: joining us now, liz claman and charlie gasparino. what do you think? charlie: he's right. the environment is conducive to starting businesses. private equity funds have tons of money. private lending market is there. venture capital funds, private equity. they are looking for businesses to start. the problem is the government. we have had 8 years of obamanomics. we are not getting businesses created and going public. when you start going public. that's the an engine to the economy. you start hiring people and expanding. that's one of the missed opportunities the last 8 years. we basically had regulations
squashing the private economy. anthony: nobody wants to go public anymore. there are too many hurdles to go public. liz: that's true. but i don't think it founders of uber or lift all started during this horrific financial crisis and of the aftermath of it. you can't keep a good american entrepreneur * down. people will start businesses no matter. gevment was started in the 1830s. during the depression. you had a lot of people going after the bankers after the depression of 1929. revlon said let's start this makeup company. fedex, they all started during recessions. if we could get rid of a third of the regulations, you would
see so many more people starting up businesses. anthony: is it just a cyclical trend and the regulatory trend will swing back to moderation? liz: i wish i had a crystal ball. but phil knight is the kind of guy who would have started fire kefire -- started nike no matter what. charlie: in the 1930s, one of the remembers you had -- one of the reasons you had a great depression was regulations. federal government was take over businesses. roosevelt had a war on small businesses. there is no doubt about that. we'll talk about donald trump. when trump reverts back to the fence instead of the wall we'll talk about it.
gary: jim mccann from hours in.com said 30 years ago he wasn't called an entrepreneur. goose * i think there is one -- there is a party in this country, the democratic party. there is a democratic party in this country that looks at businessmen as evil. when you start branding people who create jobs and invite as evil, that is a problem. uber was started, but we don't know what wasn't started. it's like the death penalty. you have a death penalty. how do you prove to people who didn't commit the crime? no one its going to admit i was going to kill somebody and i was warded off by the death penalty.
you don't know the businesses that were not created or expanded. elizabeth: paul mitchell hair started his business in the 1980s. interest rates were 18%. he was basically living out of his cash. gary: everybody who has come on this program has said access to money is difficult but if you can get, money is cheap. a huge story this week. fbn and liz claman have been way ahead of. it's the big spike in the life-saving epipen. mylan agreed to lower the out of price pocket to patients. liz, you have done some amazing reporting, you have been in front of the story all week. elizabeth: after being in a hot seat mylan said we'll offer a
$300 savings card and double the income level for which families are eligible for this savings card. it was just about at the poverty level. people are not satisfied. the mylan ceo is trying to deflect the focus to the insurance companies. can you blame it insurance companies for mylan hiking the price 1 times since they bought the epipen? charlie: this is a government problem. there is a guy high pressure vented the chair. right? there are many other chairs out there that were innovated after the chair. you have to ask yourself why a pretty simple technology is not being innovated and competition is not driving down the price. mylan can do what it did only because the government refuses to open up this thing to competition. i blame the obama administration
and the fda even more than mylan for making this product prohibitively expensive for pro people. liz: you are blaming the obama administration for a private, publicly traded company raising the price 17 times? charlie: why can't they? it's a free market. liz: the free market is working. the media is on it and the company is being held to the fire. chuck grassley, a republican of the senate judiciary committee trying to haul her in to talk about it. charlie: we are talking about epipens. you can get a competitor. why isn't there a competitor? because the obama administration and the federal government won't allow it. anthony: you have got to stay here through the commercial break. coming up next. gretta van susteren is interviewing the guy behind nike.
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