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tv   Wall Street Week  FOX Business  October 14, 2017 3:00am-3:30am EDT

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you'd like to share with us? we'd love to hear it. send me an e-mail or go to our website, john bolton. good night from new york. >> from fox business headquarters in new york city the new "wall street week." maria: welcome to "wall street week," the program that analyzes the week that was and helps position you for the week ahead. i'm maria bartiromo. the bond king jeffrey gundlach is our special guest this weekend. gerri willis is standing by with some of the big headlines this week. gerri: a busy week indeed. earning season getting underway with bank earnings this week. wells fargo with revenue numbers coming in well below the mats. the bank however did report
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slightly better than expected earnings per share. wells fa fargo. the bank's trading revenue fell 22% on a year-over-year basis. the dow, nasdaq and s & p hitting record highs. walmart helping to push the s & p into positive territory. the white house says it will end billions of dollars to insurers unless congress can reach a bipartisan deal on healthcare. billions of dollars goes to offset costs to insurers.
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the wildfires raging in northern california are the deadliest in the state's history. at least 31 people are dead and 3,500 homes have been destroyed. they broke out mostly in the wine country and have covered 300 miles. maria, back to you. maria: the federal reserve remains divide over just how quickly to raise interest rates. janet yellen's group remaining perplexed by persistent low inflation. but they say there is a rate hike come this december. my next guest is a titan in the bond world and one of the first wall streeters to predict donald trump would become the next president. joining me is jeffrey gundlach. you have got assets under
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management at a record. $116 billion. you have got to put that money to work. let me ask you about this idea about interest rates moving higher. do you expect tonight december? jeffrey gundlach: yes, i do. the bond market expects it too. the things the fed seems most of focused on are the level of the stock market and the shape of the front part of the treasury market. from comparing yield on t-bills, you can divine a probability that the bond market thinks the fed is going to raise rates. the fed never raises rates when the probability is below 70%. the treasury market certainly believes the fed will raise rates. the most of recent inflation numbers, and the core cpi, it
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was looking weak for five months in a row, the last one that came out was at the level the fed wants to see it. the ppi was .4. and commodity prices have been rising. gdp was pretty decent in the second quarter. my guess is for mid-2s or so, even with the hurricanes. the fed has a lot of momentum towards raising rates. we went from the environment where the fed needed the data to get better. they said they were going to and they didn't. starting in about february and march of this year, the feds shifted to a paradigm. they will keep raising rates if the data doesn't get worse. they are now back almost in the old school mindset. allen greenspan and ben bernanke, they use thed to raise
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rates at every turn. maria: and the 2.9% growth in the gdp. jeff require was a flat line, then they got resides and it looks like they are in a rising trend again. 2.9. with rate growth around 3%, i think it fed will raise rates along with the program they are advertising. question is what is the economy going to do in response to the rate tightening. the fed wants to do three more next year. but the balance sheet rolloff, there is a cogent argument to be made that at quantity kay tough easing helped the economy and risk assets like the stock
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market. if you take it capitalization of the s & p 500, and the ecb and the bank of japan and the fed, it's almost a constant. puck make the argument the stock market has been propelled by quantitative easing. if it's taken away, it reduces that support and the fed is letting some of these bonds roll off. we'll see what this double barrel of conditions really does. so far we have seen the relationship between short rates and long rates has compressed from a very high number compared to 2-year to 10-year yields. now it's kinds of average. there is a theme you hear financial media report that the yield curve is flat and
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signaling a recession it's flatter than it was before. but it's at the 40-year average. to be signaling economic trouble you need the yield curve to come press further towards flat. we'll see if that happens with the fed raising rates. maria: the jobs number with 2.9% rate. household income down. sentiment while it's up, people aren't spending the way you would expect. do you think inflation is here? >> not really. the fed keeps saying as they said at the outset about why their inflation models don't work. he employment gets down to a certain level of inflation, wages are suppose to go up. the unemployment rate has gone
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to 4.2 now. and wage growth has not come back anywhere close to the model. one economist had a clever saying saying the phillips curve flunks he con 101. -- econ 101. inflation isn't tipped towards the deflationary. but we haven't been able to break up to 3-4 percent wage growth and i don't think we are going to with the feds putting on the brakes with raising interest rates. >> still to come, does the bond king think washington can get tax plan passed? ♪music
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>> welcome back to "wall street week." now more of maria's interview with jeffrey gundlach. maria: there was scepticism going into the creation of the euro. now we've see brexit and catalonia. jeffrey gundlach: the euro is at a local high. it was up to 1.20. it's bent worst trade of the year for most of investors. the recommendation was 2017 is long on the dollar. we didn't fall into that trap because we realized it's not short-term fed spec taightss that drives the dollar. what drives the dollar is longer-term fed expectations. expectations for the fed raising rates along with their plan, the bonds market isn't buying it. they are not buying the 2019 concept that the fed has at the
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201 stat -- at the 2018 mark. the longer-term outlook of the fed is being disbelieved by the bond market. and that means the probabilities of the fed's tightening a lot have come down. that's why the dollar is down. you need the bond market to decide the fed is right. so far they aren't buying into it. maria: we had a little bit of a creeping back. jeffrey gundlach: in the month of august the dollar had a year to date return the most of negative of the last 20 years. that suggests it was very oversold. you have goth gone do
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speculating against the dollar. we are par is paight in that in some of our funds where we decided to pare back on our dollar holdings. the dollar index dxy went down to 90. we think it makes it to 96. but the longer-term trends is down. i'm more inclined to buy into and believe market based probabilities than i can ph.d economists. i have seen the market be right more than wrong on this. it means the fed may after doing the systematic tightening they are in. they may observe weaker data and maybe they will have to drop their dots. maria: it's interesting to hear you say longer term the dollar will be down. when you have a guy in the white
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house who is all about america and getting growth numbers up. president trump is talking about 4% to 5% economic growth. jeffrey gundlach: it's not going to happen. labor force growth is 1% less naint used to be because of demographics it's difficult to get back to sold school growth. you have to -- to old school growth. labor force growth -- i think a high economic growth is 3%. but we have been at 2 for the last how many years now. six years? >> the price of bitcoin is surging. surging. but is it a sound
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>> announcer: welcome back to "wall street week." here is maria bartiromo with jeffrey gundlach. maria: we are talk about tax reform and something new on healthcare with the president's executive order this past week. do you think it tax plan moves needle on economic growth? jeffrey gundlach: it would if it gets passed. we are 0-3 on major legislative votes. the thing about trump that's so interesting. he's such a disrupter and doer. but there has been a lot of gridlock. it's not just the democrats against the republicans. it's the democrats and republicans against trump. having him there has almost increased the dysfunction in
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washington. he's up to something that might work when you push increasing the standard deduction and trying to get a middle class tax cut. i think that kind of works bringing people together. but certainly getting a corporate tax rate down does wonders for justifying the valuation of the s & p 500. i have been allocating capital non-u.s. markets. not that i'm bearish on the market, i haven't been. in your they are noticeably lower. but the emerging markets follow an amazing trend. from oo to 2011 the movement of emerging market equities mirrored the percentage of gdp they make up. if you look at the world markets
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it was moving up in the same trajectory as their gdp share that was going up smartly. once quantitative easing came, suddenly it disconnected. the gdp continued to rise, but the market went down or sideways. now it's like alligator jaws. here is the gdp and here is the market. commodity prices went down and it had to do when the dollar win the. the dollar went up a lot from 2011 to this year. the dollar isn't going up anymore. i still think the next big move in the dollar is down aspect takes the fed is going to execute their plan diminish. that's all supportive of none
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performance of u.s. markets. maria: did you see what happened to bitcoin this week? jeffrey gundlach: over 5,000. it's speculation. bitcoin had a tremendous move and there is a lot of believers in it. i got an email from my 86-year-old mother when bitcoin was 4,500. her cousin's daughter said put all your money in bitcoin. and my mother said what do you think of that? i said these times of advertisements tend to come up after the big move has happened. bitcoin a month ago was at 3,500. it changed by 50% in a month. that's not a currency. i have seen it drop 10% in an
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hour. how do you buy a car with something that's changing value 10% while you are filling out the paperwork? maria: i'm feeling like your 86-year-old mom. where the shoe shine guy was back in the day. this is a teachable moment. jeffrey gundlach: i turned to bearish apple when it was $600 and change. and it went to $700. but then it went down below $400. the reason i got there. one of my mortgage traders was getting his haircut. his illegal immigrant drug addict hairdresser said she was going to buy apple and she felt bad she had sold it because it had gone up further. and he said aren't you worried about the product cycle and all that? she said when the tv thing comes out it will be huge.
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that's the type of thing you get when people are falling all over each other to beat other people's price targets. i saw this week some brokerage house increased markedly their price targets for amazon and alphabet from 1,000 to 1,350. both. that's what caught my eye. the target on both was ratcheted up from the same level. it seems weird they would be both be adjusted the same amount. i was bearish on apple because somebody said it was going to a thousand. it sounds like a round number. but then another guy to not outdone said 1111. i like that. but that's not analysis. that's trying to grab a headline, get your name out
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there for shock value. maria: best move to short those stocks? >> you can never short momentum. you are right. but first you get taken out at a 50% loss. i turned bearish on the nasdaq in 1999 in the third quarter. it went up 80% in the next quarter. maria: jeffrey gundlach great to see you. don't be a stranger, please. jeffrey gundlach from double lions capital. we'll be right back. today we're going to talk about trucks. which of these truck brands do you think offers best in class hd horsepower and the most capable off-road midsize pickup? i'd go ram. i would put it on ford. let's find out. noooooooo. chevy. that's right, it's chevy. they look amazing. wow. chevy's killin it. yeah, definitely. trade up to this light duty silverado all star and get a total value of over eleven thousand two hundred dollars.
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sfx: loud poorly played electric guitar that sounds awful seriously, awful but a lot better than last week ♪rock guitar music ♪we weren't born to follow maria: time for a look at what's coming up in the week ahead. we kick it off with the economic data. we'll get a snapshot of the economy when the feds beige bikes released wednesday. we are taking a look at the indicator on the health of the
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housing sector when we get the numbers for new home sales, mortgage applications and new home sales this week. monday it's netflix, tuesday, lots of big names. ibm, morgan and stanley all reporting. a big one to watch general electric. the company's stock dominating market headlines after the departure of the come numbers cfo earlier than expected and the addition of chief investment officer ed garden to the board. the stock got killed on fears the company is going to cut its dividends. ge, what a story there. coming up, "wall street week" we'll talk with the ceo of or
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cal, mark hurd. hurd. that will do it for us on "wall street week." thanks for being with me. i will see you next time. >> i'm bob massi. for 35 years, i've been practicing law and living in las vegas, ground zero for the american real-estate crisis. but it wasn't just vegas that was hit hard. lives were destroyed from coast to coast as the economy tanked. now it's a different story. the american dream is back. and nowhere is that more clear than the grand canyon state of arizona. so we headed from the strip to the desert to show you how to explore the new landscape and live the american dream. i'm gonna help real people who are facing some major problems, explain the bold plans that are changing how americans live, and take you behind the gates of properties you have to see to believe. at the end of the show,


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