tv Wall Street Week FOX Business February 25, 2017 9:30am-10:01am EST
good night from new york. [♪] >> announcer: from fox business headquarters in new york city, the new "wall street week." gary: welcome to "wall street week." i'm gary kaminsky. trish: i'm trish regan. trish: u.s. treasury secretary steven mnuchin laying out an aggressive tax timeline. >> tax tree form is our number one objective. it's critical to get economic growth. there is trillions of dollars offshore that will come back and this will create jobs and
investments and we need to make sure our u.s. businesses are competitive. gary: any growth wouldn't come until 2018. our first guest is dan skelly. dan, the meerkt is optimistic about a tax plan that's yet to be unveiled. mnuchin talked about the hopes to have this plan passed in august. are you starting to get worried this could get bogged down because the expectations are that this would have been sooner rather than 2018 impact. >> it's coming on the back of a decade of having very little fiscal spending. we could see some volatility in the middle of this year. but we think the tax deal gets done. we think the market can grind
higher afterwards. trish require doesn't matter -- trish: it doesn't matter when it gets done as long as it's done within a reasonable amount of time? >> it's only one component of some of the change we are seeing in washington. we will be on the lookout for infrastructure initiatives and potential changes to regulation. we are hearing a lot about the fed chairman supervisor, and sovment -- and some of the other regulatory bodies. there is only one components of this change. the effect it might have on retailers, the what it's currently being pro poatds in -n the house, you would not have the opportunity to deduct your expenses. if you think about the gap or something importing t-shirts from china.
they would not have the ability to deduct the cost of those goods coming in from china. there is concern in the retail industry that it will decimate tree tailers and you will see a lot of bankruptcies if it's successful. >> the question is how much of it is priced in today. we have seen a correction by a lot of the retailers the last quarters. and also on the fundamental pressures. huge losses to e-commerce. so it's not just risk and the valuation risk around tax, it's the fundamental pressures you are seeing on retears and we tried to avoid that space.
gary: dance portfolio is one of the best kept secrets. and i want to go back to one more thing from mnuchinhi week. secretary treasury did say this is a mark to market administration. the stock market has responded strong on the mark to market. but is that something you heard about this week? is that something you are concerned about? we all know the stock market doesn't go up every day. >> my opinion is as follows. yes, there is a lot of focus on the white house and some of the leadership there. but we had a dramatic change in the house and the senate. and the fact that we have a republican controlled leadership is why the mix is so low. the market is telling you for
the first time in 10 years, we have the highest probability of getting pro-growth policy done. the white house is trying to live up to its expectations and they are pushing expectations higher. but they may have some serious support from the house and senate. gary: give us one stock, your best investment ideas for the changes that will take place from a miss cal and ma -- from l and monetary standpoint. >> we saw stock trading at 11 times earnings with wells. of course, wells has rallied post election with the rest of the financial space, by the hasn't regained its premium to the large cap banks. wells typically trade at a 10-20% premium.
today it trades as a discount. it rallied, but the whole sector has rall lived as well. we think they will re-gain their grand equity. but what's about regulatory changes? the more the market see regulatory change to the financials, that will shoot higher to the upside it's fundamentals and policy. gary: it's been a great two months on the stock market. >> we think equities are not overvalues. we think there could be 10-15% upside the next 12 months. we came out of the industrial recession. we came out of that last year. if you couple that with the potential for policy improvement, fiscal spending, deregulation, we think that's cocktail for 15% upside.
adjustment tax. it's not fair we pay something into one country as an importer but they don't way coming into this country. some pay like that is in the offing. gary: marty sass is joining us now. there has been so much talk about the border tax. is this something we need to be concerned about? >> we have to be mindful of the winners and losers. we avoid retailers an and apparl companies. they will get hurt by border adjustment taxes. it will even courage more production in the u.s. and to balance the budget with big tax cuts we need an offset. the border adjustment tax is one of those mechanisms.
trish requirmechanisms. trish: i agree with you the retailer will get hit by this. but how big of an impact will it have in terms of market sentiment and our fundamental economy. we employ a lot of people in retail. >> if you look at it in isolation it will have a net negative impact. if you look at the lower income people, they are going to be hurt the most by this because prices will go up and it will hurt them. so. trish: donald trump is a smart man. so he understands business and the fundamentals of the economy. and i think there are a lot of smart people in the house as well. are they not thinking this through? >> i think he's getting mixed
feedback on this. he was negative, then turned positive. and that's where you are seeing this. gary: you are a stock picker and you have been successful in identifying trend and where to put money in terms of the global economy. you are avoiding retailers. wh do you see as your best idea to take advantage right now of the trump view of how we see the economy and see the world? >> being one who likes to buy stocks they they mate it. great companies at cheap companies. i'll give you the most hated group of and the most hated stocks. they have been very poor performers and i think they are extremely cheap. the whole specialty farmer in
bio tech sector has pockets of extraordinary opportunities because donald tweets about monopolistic drug pricing they threw the baby out with the bath water. they deserve to get hit. but companies i will suggest which is schier, so girks and alergan. they have double-digit earnings both for the next five years minimum. 2% compounded annually for sogi. this is under organic growth. it's not assuming buybacks. allergan trading at 5 times and
shire at 10 times. they don't grow at 1% or 2%. they are selling at discounts on the markets. the market is excessively pessimistic about what this administration will do. gary: why is the bond market not buying into this growth story? u.s. treasuries continue to tell the market mess and that we are not going to d market message that we are not going to see the bond growth. >> after a 35-year bull market in bonds, i think the bottom in rates was hit july 6 of last year at 1.37 on the 10-year. it's creeping up gradually and
it will be a jagged move. but i think we are in a long up trend in rates. it will be gradual and slow. as you pointed out, low rates around the world. german bonds hit a record low. that's anchoring our yields down, but the trend is still up in my view. i think we are in a bear market in bonds. trish: in some ways perhaps it's good to have a cap on those yields if we want to do all this spending. >> and if we want to continue to have a bull market. it's fine that interest rates go up gradually. but if they spike, that's the end. that's where it tends to cause market crashes and that -- >> we don't want that. good to see you. thank you so much. we'll have more on "wall street week" after this. >> announcer: the treasury
tish * i have got good news and bad news. we are standing at $20 trillion in our national debt. that's trillion with a t. >> let me just say the absolute level of debt is a concern for me and a concern for the president. and as you mentioned under the last administration, they doubled the debt. having said that, our number of
one focus is economic growth. we need to get the economic growth to solve the issues that we have in this country. so the debt is a longer-term issue, not a shorter-term issue, but something we are focused on as well. gary: sounds like getting a hand on entitlement spending and our national debt isn't a top priority right now. but as he pointed it it doubled over the last 8 years it's not as though it happened overnight. it doubled the last 8 years. trish: let's go to cheryl casone and david asman. if you were going to prioritize things' what would it be. >> economic growth and then national debt. he said there are times when you have to worry about the debt, but now we have to worry about debt.
there are times you have to prime the fusm much and this is the time to prime the pump. defendant cities up as well. year-by-year deficit for the fires time in three years the 2016 defen deficit increased. so spending is a big problem. he has a good person in the budget department to oversee that. cut the expenses in government. focus on tax reduction and growth will take care of the rest. >> i any the debt needs to be addressed equally as strong as economic growth. but they don't have a plan for that. if you look at that $20 trillion. hatch that is owned by foreign government at a time when our relationships with those governments --
david: the low interest rates are not that bad. lo how hh they were in the 1980s. they said we have to worry about the debt. at that point we had interest rates at 14, 15, 16%. and we got debt under control by growth. reagan said to heck with it, we need to prime the pump and he turned out to be right. gary: when the prediction was made that donald trump would win the election web said trump is a guy comfortable with debt. the fact that he's comfortable with debt means he has found how to handle the cycles. but there will be times when the rates start to move you have and servicing the debt will be a concern. >> we had 18% interest rates. >> at that time there was not this idea that interest rates
were such a driving impact on the -- on the overall global economy. we are two months into the year and you said the markets wouldn't continue the run. do you feel the stock market has gone the ahead of itself in terms these expectations being built into the market? david: people were saying during the last four years of the obama administration, the market is going bow man zas. if you x -going bonanzas. if you look at where the market was before the financial crisis,ist was overblown. but not too much. it was a steady rise with a lot more to go it was stopped by those 1% growth rates during the
obama administration. we had the most pathetic growth rate in history during the obama administration. even though the market was going up, the economy was pulling it down. if we don't see action on tax cuts, thinking that the market has topped out because they are waiting for action on tax cuts, if they see that delayed much longer the market may pull back. we didn't even hit two. now we have this opportunity. you get the fed, in the back ground it was helping things along. now they actually have to do their job. so with all that in mind can we start to see, i don't know, 4%, 5%?
what's it going to take to rev the engine? >> we are in the beginning stages of that. i believe a lot of those economic plants getting him elected -- economic plans getting him elected in the first pl 3%, 4% growth. if you listen to steve mnuchin who was on fox business, he said, i am going to go for 3% to 4% growth. he wants to see that. he backed off that a little bit with maria. but at the same time, long term i think he's thinking 4%. david: remember the growth rate in 1984. 7.4%. trish: didn't you tell me your mort game was 16%?
-- your mortgage was 16%? gary: that does it for us and "wall street week." trish: tune in to fox business if you're taking prescription medications, does your mouth often feel dry? a dry mouth can cause cavities and bad breath. over 400 medications can cause a dry mouth. that's why there's biotene. biotene can provide soothing dry mouth relief. and it keeps your mouth refreshed too. remember while your medication is doing you good, a dry mouth isn't. biotene, for people who suffer from dry mouth symptoms.
>> lou: republican house and senate leadership walking on the tax and obamacare. patience wearing thin. the congress went on recess while the president is working hard. >> president trump: we are doing health care and march, mid to early march, we'll be submitting something that people will be impressed biechlt lou piniella voters may send republican ares pa