tv Wall Street Week FOX Business October 9, 2016 6:00am-6:31am EDT
politicians don't know much about so much. that's our show. thanks for watching. [♪] >> 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. and i'm gary kaminsky.
ed the u.s. economy added 150,000 jobs white unemployment rate ticked higher to 5%. anthony: the second in jobs report comes the day before election day. steve einhorn, the vice chair of omega advisers. >> any one report has to be taken in context. i would characterize the report as a reasonably good one. while the headline number was a bit weaker than expected, the private sector employment increase was in line with expectations. there was some lift in wages which is good. the participation rate, the number of folks reentering the labor market moved up a bit. sow i would say it's a good report. one that likely will allow the
federal reserve in december to lift interest rates. >> there was a full time jobs. i'm wondering, the quality and mixture of the jobs, is that healthy for the economy? >> there was to decline in full-time jobs. one could look under beneath the hood -- could look underneath the hood. but any one month had to be taken in context. i thought it was okay. anthony: the fed moves before christmas. gary: i was thinking about this. anthony and i have been in the investment world 35 years with you have been in it a little bit longer. you have got all of this noise from the fed. people come up to me all week. what do i try to do, how do i stay focused. what are your words of wisdom how a long-term investor can
continue to run the play but not be distorted by all the noise? >> this will sounds odd and out of consensus. this an opportune time for the long-term investor if un, remove themselves from the short-storm volatility and at times overly granular analysis of the fed or the data. if you look back historically. there are a number of items typically present at ends of a bull market. but interestingly and importantly, none of them are present today. my expectation would be that the equity bull market in the u.s. will persist for quite a while longer, suggesting for the long-term investor, this is a reasonably constructive period. tone require doesn't mat more wins the election? >> i think the market has built in scene expectation.
whether it's correct or not. i think the market expects as best i can tell talking to a whole bunch of people is that hillary clinton will win. it doesn't mean she will. anthony: you think if in trump wins the market would sell off? >> there may be a correction simply because he's less known, he's not a career politician. what would happen thereafter would depends on who he surrounds himself with, who his advisers are and what the congress allows to be implemented. i don't think we can say in any hard and fast way there is a sustained up or down response to the election. what we can say is for now the market understands hillary clinton better because she has went in public eye for 30 years. >> the election, we'll know in
six weeks whether the election is going to affect the stock market or not. anthony: we have had a lot of people on our show the last couple months that they don't think it matter long term for the market. it may be an issue short term. steve, you were about to point out, what are the signs that a bull market has ended? explain to the viewers. >> there are rely any five items that tends to be present at the ends of a bull market in the u.s. the first is accelerating and problematic inflation. we don't have that. the second is a central bank federal reserve which is hostile to the economy that is trying to curb economic activity, we don't have that. third is the arrival of recession. our work would suggest we are in the midst of what would be a very long lasting though
moderate economic expansion so we don't have that item. fourth, investor exuberance. we don't have investor exuberance. this has been one of the more hated bull markets of the postwar period. and finally speculative or bad valuation of stocks relative to interest rates and inflation. so i would submit that those five items which are almost always present at the ends of a bull market, the start of a bear market in the u.s. not being present suggests the odds are this bul for a while. gary: i would agree with four out of the five. how do you -- would you agree with that. the recession for next year? anthony: i'm in steve's camp. i think you will get this steady eddie phenomena where we won't grow as fast as we would like. not consistent with post world
war ii fork recovery, but lasting longer. >> stretched out expansion, 2% expansion. it's less than the historical trend. my constructive view on u.s. equities is as much length as return. i think market multiples are about where it should be. 17 to 17 1/2 times. what i expect is the market can grind higher in line with earnings growth of 5%. so it's as much to me how long this bull market lasts as to the return itself. anthony: omega, you are in a bat wind chill sec related to trading. do you want to make a comment about that? >> it's a serious issue and this
case is best served not being tried in the media so i don't have any comment on the case. anthony: we appreciate that. i had to ask that. stick around. we have more to discuss with steve einhorn. "wall street week." we'll be right back. >> announcer: the economy expected to be front and center sunday night in st. louis when donald trump and hillary clinton go at it in round two. donald trump going after ford donald trump going after ford for sending jobs to mexico. what is success? donald trump going after ford for sending jobs to mexico. is it a professor who never stops being a student? is it a caregiver determined to take care of her own? or is it a lifetime of work that blazes the path to your passions? your personal success takes a financial partner who values it as much as you do. learn more at tiaa.org
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lowering taxes across the board for small businesses and families across the board. anthony: they are making it clear the economy is king. >> they are two very different plans. what do you think we need to get the economy growing at a stronger rate? or will we be in this 1% malaise permanently. >> there are policy initiatives that would help the economy grow bert. monetary policies have done jutd about as much as it can do. i think we need fiscal policies, fiscal stimulus. my preference would be infrastructure spending that can both lift the cyclical outlook for the economy and most importantly lift productivity which would lift potential growth to the benefit of all. to me, spending on education, job placement, communication
networks. transportation, would be a very good complement to existing friendly monetary policy. finally, there is a need for such spending which has been lagging for a number of years. anthony: 4% growth is possible in your opinion? >> i think 4% growth in the economy would be a stretch right now. gary: if we have that kind of fiscal policy, how do you make certain the money that is okay to be spent is spent the right way? >> there is no certainty with respect to how it is spent. all we can do is rely upon the leadership in the white house and congress to design and implement an intelligent program. obviously in the past we have failed in that regard. our last stimulus program did not do what it was intended to do.
and didn't give the economy the jolt as expected. i would hope this time with leadership in the white house and congress it could be intelligently designed and implemented to do what i described. most importantly you need a fiscal policy to lift productivity and raise potential growth in the u.s. to the benefit of workers. gary: a business person would have a better idea of how to spend that allocation. >> last night i was with mark lazory. i was a surrogate for mr. trump. we have $2 trillion off the shore in the united states.
to the extents that we could implement a lower tax rate on it. let's call that 10%. that would be $200 billion that would come to the u.s. that could fund over a several year period. and need infrastructure spending. but as importantly, assume that of the $2 trillion abroad, a trillion comes back to the corporate sector. they could use that trillion dollars for capital spejtd and dividend spending and buyback. it would be energizing to the infrastructure and it would be energizing as well to the corporate sector. anthony: there is such positive externality, those well-paying jobs are paying taxes into the u.s. treasury.
you get the growth and you get sustainable middle class living standards. we have to figure this out. left or white right, we have to figure this out. >> i think at the current time there is bipartisan support for infrastructure spending. likewise there appears to be bipartisan support for some repatriation program with some debates surrounding the tax rate applied to nose unremitted earnings. but all the things that the government can do, this to me seems to be the most direct and most constructive in terms of the economy. gary: you talked to companies and speak to management. the congress -- the folks in congress against it say how do you know the company is going to do something to help the economy? if a ceo you know is able to bring back this money, are they going to do something that's not going to benefit the economy to help grow their company in the
imis world? >> i would say a ceo is mandated to optimize returns for shareholders. they will use the money productively whether it's for capital spejtds or to lift dividends which all shareholders benefit from. whether it's share buyback or merger or acquisition. they will intelligently allocated the capital. >> this is the biggest untapped opportunity for economic growth just sitting in washington that for 8 years -- that's what why there has been a call for outsiders to break up the rubble in washington. let's talk about second towards and what you like about the market. where are you putting money or where do you have money? >> we are in a slower growth economy. so for the corporate sector, revenue is hard to come by. profit margins are elevated so earnings growth will be
challenging. so i'm looking for sectors that can deliver above average revenue growth. >> so recognizing there are some political issues there. i think it's an attractive sector. it sells at a 10% discount to the markets multiple. historically it sold at a premium of 20%. it grows revenue on a trend basis of 5% to 7%. well ahead of the typical company in the u.s. it can grow earnings on a trend basis 10-12%. double what the typical company and the u.s. groats at. and it generates a return on equity in aggregate 500 basis points more than the typical company. here you have the second for with better revenue growth than the average company. better earnings growth, better profit margins. high return on equity.
and a sector because of the political uncertainties where investors moved from a substantial overweight position to a less overweight position. so healthcare i think -- anthony: that's a key point as to what happened the last year given the political landscape. >> appreciate your time. thanks for being with us. >> announcer: still to come on "wall street week." hillary clinton says it's time for big tech to step up and help catch the bad guys. one of the most respected voices one of the most respected voices
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of tech companies and experts online who can give us the tools and lead us to those who are attempting to promote attacks like we have seen. gary: hillary clinton calling on the silicon valley to help fight propaganda and recruitment online. there have been instances where tech firmts have been less than cooperative like when apple would not unlock the iphone of the san bernardino terrorist. anthony: i recently sat down with a tech company representative. >> u.s. citizens and corporations will be helpful. but tech companies are not part of the military industrial complex. they have a responsibility to create the best tools in the world.
>> to what point? where is that point? >> i think the point is if you have information that you can disclose without violating the privacy of a larger set of users, that's great. anthony: is that profiling? >> profiling is a tough case. israelis do it, the f.b.i. does it to some case. there are constitutional issues for racial. that's beyond my pay grade. but the encryption bac back doo. you can't build one that can't be violated by everybody. gary: radical jihadists in chelsea, new york,g the items for the bombs on e-bay. could e-bay alert the f.b.i. buying the chemicals and the
detonators. should e-bay say we have somebody buying them, they are sending to this address, we are giving you an alert. >> technologically they can do that. gary: how does it work? >> they do a key word filter searching what people are buying. but then these guys will go to dark markets and go off e-bay. the terrorists will always have encryption, so bang them from general citizenry doesn't solve the problem. anthony: it's january 21, you are in the oval office making advice and counsel. what would you like to see? >> on the technology side of things, i would like to see the.
drones, crisper, they are always hampered by regulations. it's better to have a deregulation path. anthony: would you like to see more use of bitcoin? the terrorists are using things like bitcoin. >> they also use gold and cash. you don't ban those things. technology is tools. you can allow tools or ban tools. you can't control who uses it for what. gary: kobe bryant just refriertd nba. anthony: what else it about being a venture capitalist that everybody wants to do it? >> technology is the fee tiewfort human species in the past. we are here because of technology growth. there is cell phones in everybody's pocket. that's what we do is
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