tv Wall Street Week FOX Business December 30, 2016 8:30pm-9:01pm EST
lou will be back next week. happy new year. >> announcer: from fox business headquarters in new york city, the new "wall street week." gary: welcome to our special year-end edition of "wall street week." i'm gary kaminsky. sandra: i'm sandra smith. happy new year. the dow, nasdaq and s & p all with nice gains for the year. the dow industrials was the later former after donald trump's big victory. all three hitting new highs. the dow teased us but never quite got to the 20,000 mark. gary: what will -- so what will
2017 bring in. rob, if you just brought the s & p 500, you got your 10% rate of return on stocks. what should the long-term investors go into next year reflect on? >> don't panic. we started with a massive sell-off, and mixed data at the end of the summer caused another sell-off, albeit shorter. brexit as well caused a sell-off. i think the idea of focusing on fundamentals, looking beyond the immediate market noise and media noise, investors would have done well by doing that. the second thing i would say is
don't confuse the base case with a done deal. brexit markets priced in a stay. it surprised everybody. then the trump election. in each case, again not focusing on the noise, focusing on fundamentals made sense. the final thing i would say is don't underestimate the central banks. there has been a lot of talk about policy reaching its limits and becoming less and less effective. what they have proven whether it be the fed other ecb or any central bank, the ability to engineer commentary and policy that makes sense to the markets. so if you can be patient i think you will be rewarded. sandra: remov emotion from the market. people were in panic mode.
but there were so many events that affected markets this year. what do you think was the single biggest events to impact markets? >> one to the point that rob made. the world did not end coming into the year. people saw markets collapsing, oil going down. but the thing people missed is the probability of u.s. recession was still very low. even though markets were messy, the u.s. economy was not going to have a recession. the consumer was too strong. we have to say, the trump election victory it's obvious. if you think of this country trapped in 8 years of anti-growth policies that have been stifling to business, looking forward -- we are going to go back to an administration where we have much more regular story-friendly policies -- regulatory-friendly policies.
that's driven markets very well. sandra: you could have heard me like a broken record saying the one who wins this election will be the one who proves they will be the most business friendly. as far as asset classes that were the biggest losers, what did you see? >> precious metals and duration. midway through this year people worried about deflation, they thought u.s. economy could have a recession. so the 10-year was dropping like a stone. since the election you had a substantial right back up. so long-dated bonds have gone the hammered since the election and precious metals have been the other side. the rationale for owning precious metals has gone down dramatically. so we points those out as getting punched in the face from the election outcome.
gary: rob you said stick with the fundamentals, don't pay attention to the noise. where should i put my money and how should i do that? >> you have to start with what are the questions facing markets this year. what does the trump presidency mean? what does pivoting away from easy monetary policy mean for markets? what's going to happen in china as it relates to a potential hard landing? >> answer those questions. >> when we look we think there is opportunities for investors. it's hard because equities are sitting here all-time price level highs. so is high yield, so is investment grade corporate. the juice has been squeeze out of a lot of asset classes. but we think there is room to run in a number of areas. u.s. equities and the profit trajectory will be improved by trump's policies. we think from a quality consistency transparency stand
point the u.s. is in the safest place. emerging markets will be the beneficiaries of global growth. no one likes them because they are worried about funding, funding in dollars, the value of your liabilities goes up, the value of your ability to service that with your currency goes down. but we are funding differently today than we did in the last cry e.m. crisis. we add to yield-based assets. we talked about that on this show. >> in complex fixed income markets the fundamental improvement continues and pricesv are very low and you have an enormous cash flow. that offered the competitive returns. sandra: you guys look very nice in your new year's attire.
we'll get you great healthcare at a fraction of the costs. we'll have jobs again. not bad jobs, veal jobs. and it will be something special. gary: donald trump promising a lot and promising to do it fast. sandra: which campaign promises are most crucial to igniting our economy? to our fox business all arounds, happy new year. it's been a heck of a year. looking back. it's been about the election that changed everything for these markets. david: looking forward to what trump has to do to get the markets bumping. we could have a really substantial bump higher. august, 1981.
that's when ronald reagan got the tax act passed. if in the next six months -- that was about six months after ronald reagan took office. from there it was bar the door in terms of economic activity. volcker had to squeeze inflation out of the economy. but if he gets a significant tax cut cutting corporate rates more than in half and middle class tax cuts across the board it was only stopped about president obama and the recession. >> do not do a phase-in. david: not phased in as day -- n just said. >> they want 3% to 4% sustained growth.
that's the way you do it. >> in terms of regulatory reform, something peter morici told you earlier this week. watch out for -- you have need leadership coming out of the white house on rolling back these regulations. if you let these departments get away from you in terms of what they are doing in terms of rolling back these regulations, nothing will get done. so you have to be on topf that. there is a businessman,al real estate mogul in the white house. gary: 100% of the move since the election is emotion, there hasn't been anything fundamentally at rob sechan was talking about. while tax reform is important. as far as the stock marker is concerned.
it has priced in now. especially when it comes to financial service. if that doesn't happen and that's not a top priority the market will soften. david: markets don't see everything. they didn't see the 2008-2009 collapse coming. they didn't see the spectacular growth. right now we may be on the cusp of some tremendous technological revolution that none much us even know about. it could be virtual reality. it could be a lot of different things. we didn't see the tech logical revolution in 1981 when reagan got the tax cut signed. but look what happened. the market is a great indicator before it am not perfect. >> markets see something different.
2.1% growth since the recession. so what we got in the last 8 years did not get the economy growing at its potential. another thing to keep in minds. you have had such a boost in confidence, confidence can lt economy. if you change your behavior based on how you are feeling, we save the after 9/11, we've came out of. >> recession in november 2001, a lot of it was confidence and that gives president bush credit for that the way he spoke to the american people. >> if you make consume sisters feel comfortable. these are the rules of the game and we are encouraging you to spend your money and hire people, there is clarity, that's going to happen. sandra: interest rates and the environment we might be in.
>> in 1981 they were 18%. gary: i think much like 2016, there was an expectation the fed would raise rates. i think 2017, economic growth and optimism and confidence will be greater here than it was. but we have the rest of the world. we have inflation concerns out of the europe and slower growth in asia. the drag on rates will limit the fed. david: the fed believes we'll have slow growth for the next three years. i think the d isead wrong like they have been wrong before. >> they didn't even change their economic forecast. the market was saying better days ahead. and yellen and company didn't
change that. gary: the last two weeks of the year doesn't relate to the bond market. the -- in terms of yield, the stock market got way ahead o itself in terms of the trump victory. the bond market is taking us back to reality. yes, there is a lot of optimism and confidence. >> income managers are reversing some of those they put on treasuries. gary: confidence can create growth, but you won't have 3% growth in the first quarters. >> i want a yell on raise rates a lot in the new year and have trump tweet -- i want yellen to raise rates a lot in the new year and have trump tweet about her. sandra: expectations are high
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sandra: the 2016 election dominated every facet of news this year. but which story was the biggest business story of 2016? gary: david, what was your biggest business story? david: i'm going to cheat it's the comeback of carbon energy, particularly coal. lot of companies went bankrupt as a result of the attack on
coal the past 7 years by the obama administration. but some people saw it coming. carbon energy, particularly the potential of the united states' explosion. even after we knew about fracking, this new layer of it now that coal is coming back and there are certain coal stocks that look real good, i think that's the story, the comeback of carbon energy. >> all hail the internal combustion. >> the epipen exposed the extremely high drug price and the problems with the healthcare law and insurance companies and how we go about fixing that. mylan is putting a generic on the market and i think drug prices under a trump administration go down because he will speed up the fda approval process. >> mine is the post-election
rally. people like mark cuban said the market was going to collapse and was going to put a 100% hedge on miss equities fit looked like trump was going to win. the likes of maria bartiromo saw the writing on the wall. gary: i remember seeing him at that first debate and he was a little happy that morning before the debate. >> in the event donald wins i have no doubt the market tanks. fit looks like he will win i will put a huge hedge on that. that protects me in case he wins. i can go on, but. gary: my story will not be the trump election. what i think 2016, the end of the extraordinary impact the federal reserve has had all capital markets. the 8 years since 2008, the fed,
the central bank -- david: central banks around the world. gary: the fed changing the extraordinary policy after 8 years. that's the biggest impact. sandra: i'll say the election was the biggest market event of the year. and just remember that night. remember the sell-off that we saw in the stock index and futures? >> that paul krugman said would last forever from which the market would never recover. >> some tv anchors showing tears. but then you actually have a comeback of confidence, you have the american people feeling there are better days ahead. gary: better days predictions
2017. >> at least initially, you will have a rally in treasuries and stocks will remain weak into the new year. sandra: the donald trump twitter account and its impact on markets. people were sceptical of this use of twitter. i spoke to sean spice were, he said he's going to continue using it. a lot of people think it's a good thing. but he has the ability to move markets with a tweet. >> twitter stock is down 20% this year. you would think with donald trump using it so much -- my market predictions would be for wall treat-main street con -- for squall street-main -- for wall street-main street confidence to continue. david: there will be a pause because there will be so much pushback to what our expectations are.
they are sluggish s.o.b.s. confirmation hearings. once he gets the tax cuts and deregulation through. the second half will take off. gary: since i know we'll play this a year from now. everybody is betting the dollar strength will continue. i'll say a year from today the dollar will be lower because everybody is on that side of the trade. and you know from your days in commodities it doesn't work that way. sandra: so you are saying you are safe with that. we can play that back a year from now? gary: absolutely. keep it. sandra: thank you so much. somebody has to have the champagne. gary: i want to say before we run it's been a great first year
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