tv Maria Bartiromos Wall Street FOX Business October 14, 2018 7:00am-7:31am EDT
i'm jamie colby for "strange inheritance." thanks so much for watching, and remember -- you can't take it with you. >> from the fox studios in new york city, this is maria bartiromo's "wall street." maria: happy weekend. welcome to the program that analyzes the week that was and helps position you for the week ahead. i'm maria bartiromo, and what a week it was for the markets. in just a moment, i am speaking with blackrock's rick reiter here to talk about the outhook of what -- outlook of what we see in stocks after the dow industrials lost 5.25% over a two-day period. we will talk with rick coming up. then later, stacey cunningham is the president of the new york stock exchange, she will be here
exclusively. but first, gerri willis is standing by in the fox business newsroom. gerri? gerri: thanks, maria. a stressful time for investors as the markets saw their worst start to a quarter in eight years. concerns about slowing global growth due to trade, rising interest rates and fears that earnings may have peaked helped cause a two-day dow jones selloff of nearly 1400 points. the dow, the nasdaq and the s&p all looking at the worst start to a fourth quarter since 2008 during the height of the financial crisis. it was also the worst start to any quarter for all three indexes since the first quarter of 2016. few sectors were immune, but bearing the brunt of it was technology as microsoft, net flicks, facebook and amazon were among the hardest hit. in other news,s another hurricane has ravaged the southeast as hurricane michael pounded the florida panhandle. the death toll, at least a dozen
with this expected to rise. more than a million homes from florida to virginia are without power. the category four storm was the most powerful hurricane to hit the continental u.s. in a half century. maria, back to you. maria: thank you so much. a white knuckle week for investors, many pointing to rising interest rates as the culprit behind a huge selloff. the dow jones industrial average gave up 5.25% in two days, the s&p 500 down 2% in two days, the nasdaq up 2 president in just two -- 2% in just two days. president trump calling out chairman powell. >> the problem, in my opinion, the fed is going loco, and there's no reason for them to do it, and i'm not happy about it. i think the fed is making a mistake. they're so tight. i think the fed has gone crazy. i'm paying interest at a a high rate because of our fed, and i'd
like our fed not to be so aggressive, because i think they're making a big mistake. it's a correction that i think is caused by the federal reserve with interest rates. i think the fed is out of control. i think what they're doing is wrong. maria: wow. well, the federal reserve did raise interest rates three times so far this year, joining me to talk about that is blackrock's rick reeder, overseeing $1.9 trillion in bond assets. blackrock overall currently more than $6 trillion in assets under management. it is great to have you on the program. >> great to be here. maria: what a week it was. assess the situation for us. what do you think went on this week? >> it was -- i mean, i think, i don't know, in years it was the most volatile week. this is the most demultiwhite house -- demultiwhite house -- equities, rates were gapping on not a lot of volume, and that's trying to figure out what is actually driving it.
what's driving it is people pulling away. people, i don't think, recognize when you drain liquidity from the system, when the fed ends qe, you now have a system that's more volatile. and so when you get selling, it almost creates more selling because there's not the liquidity in the world that there was a year ago, two years ago when you were putting tremendous liquidity into the system. it started with the rates moving higher. markets are always funny about the round numbers. three was the big, now it's three and a quarter. and, you know, we bottomed. and interestingly, around midday monday we ended right at three and a quarter, and now we've come off of that. i think we'll be a bit more stable going forward, but it was a wild week. maria: it really was. and volatility picked up, volume picked up as well. there's a feeling out there that there's been a shift in allocation. people are getting out of stocks, going into bonds. did you do that? >> so not so much in the portfolios -- maria: is that happening though?
>> you know, there's less, there's definitely some reduction in equities. the thing that's pretty amazing is what's happening now we see in our flows, what you see in the industry flows, and, you know, these shift over time, but less money going into stocks and bonds. and so that pauses, and that's a bit of that liquidity die page in. but what people are doing, there's a big asset allocation shift that's happening. the two-year treasury earns almost 3%, more and more money coming into short dated i wants a sets that i can't lose money in. the bond market is experiencing higher rates, what do i do? gosh, give me 3%, and i'll feel good at night, i'll sleep at night, and that's a big shift. maria: that's the thing, if i can get 3% in a two-year and i know that i have safety of treasury, the u.s. government, why would i pick stocks which may carry more risk? and then i could lose money? >> so i think there's, i think when you think about it in a
portfolio concept, we advise people from a portfolio point of view, so gosh, you know, i used to own a lot of long-dated treasure thelies, 10-year, 30-year because they helped my risk. now the yield curve is flattened, i don't need those anymore. i'll get the short end and, by the way, equities, i would argue if you take free cash flow multiples in the equity market, u.s. equities earnings are still very good. companies are buying back historic amounts of stock. so maybe i'll own some of the front end of the yield curve and some equities for upside appreciation. maria: we want to talk more about this, and i'm going to get into the weeds with you when we come back, because you owned tesla for a while. you own the tesla car -- don't tell me. we're going to talk about tesla and apple in this market when we come back. plus, ahead in this program my sit-down with new york stock exchange president stacey cunningham. stay with us. >> she's gone from being one of the few women on the trading
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♪ ♪ maria: welcome back. we are back with blackrock's rick reider. rick, i'm glad you don't feel like something has materially changed for these markets. you still own equities and still, obviously, are changing your allocation in bonds, but you are very much in the short-term duration there. let me ask you about equities, because some of these high fliers, trillion dollar valuation for amazon, trg dollars for apple -- trillion dollars for apple. that was one of those things that initially tech dragged the market down. are we still looking at an overvalued situation in tech? >> i don't believe so. when i look at forward multiples on some of these and you think about what the cash flow growth
could be in some of these companies and our commerce is shifting in the world, people said three years ago, five years ago some of these companies were -- these are real forms of commerce. the way people use their mobile phone, the way people purchase apparel today, the way people -- fuel is being, is powering vehicles today. the world is shifting commerce, and if you'd actually map out what forward pe is going out a year, two years from now, i actually don't think they're that high at all. now, can they readjust, should they readjust, for sure. but, boy, i don't think this is the internet bubble like all of a sudden people realize now you're getting real change in commerce that i think is changing the world. and by the way, the next stage of that is artificial intelligence evolution of how commerce, manufacturing, consumption, how you run your home is evolving. it's incredibly exciting, and you're seeing that market cap. i looked at the market cap today
versus 10 years ago, 20 years ago, who the ten biggest companies were, i think we're, quite frankly, in the greatest cost revolution of our time. my god, inflation's going to burst out of control, it's really hard for that to happen when the technology today is about doing what we used to do more efficiently as opposed to prior years, i can do what i used to do at a fraction of the cost. that's what much of in this technology's doing today -- maria: so this could be a buying opportunity then this week. >> i think so. you know, i -- [laughter] i've done a bit of it myself personally. yeah, no, i think so. i think there is -- listen, it's not to say we're not going to have more volatility. we're going to have more volatile markets pulling the liquidity out of the system. you're supposed to pick up these opportunity9. this is a huge move that happened very quickly. maria: and, now, in equities you own tesla. >> personally. maria: and apple personally. >> yes. maria: so you're still a believer, and you have a tesla
car, two teslas. >> yes, ma'am. maria: you're a believer. there's been such volatility around that company with elon musk. >> so, listen, i don't -- and by the way, the equity was $34. people forget, they talk about where it's gone and the range it's gone. listen, i do think in that we're changing, we're changing the dynamic around a lot of these technologies and that efficiencies are being created that you can operate at a lower cost structure, you can sell vehicles, you can sell mobile phones and create amazing efficiency. the price of phones isn't coming down. what it allows you to do, i don't need a tv, an alarm color, a radio, a gps -- maria: it's incredibling. >> and, by the way, a vehicle today, how many people think of it, it's functionally a mobile phone on wheels. and it's the technology today. maria: great to see you, rick. rick rieder from blackrock. coming up, she started on the floor of the new york stock exchange and now she's running the place. ♪ >> i think when we talk about the markets, very often people
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♪ ♪ maria: welcome back. this year the new york stock exchange named its first woman president in the exchange's 226-year history. stacey cunningham started as an intern at the nyse back in 1994 but quickly became one of the few women to work as a trader, a market maker on the floor of the exchange. in 2015 she game the chief operating -- she became the chief operating officer. she was eventually named the nyse's first female president in may of this year. this week i visited her at my
old stomping ground, the new york stock exchange. i spoke with her on a wide range of subjects including her take on this monster selloff this week. >> the market's been in a pretty extended period of low volatility and lower volume relative to yesterday. so it was, you know, those point moves are much bigger considering the strength the market has had over time. but on a percentage basis, they're not so significant. it's not even a top 20 market drop. maria: i realize this move we saw this week was small in terms of the percentage of big moves, but still there's this worry. how's the sentiment down here? >> i think it's not too dissimilar to back in february. we saw a lot of volatility, we saw the market sell off in a more meaningful way than it had, but very quickly there was a recovery, and we saw the market continue to trend up throughout the year. it feels a little bit the same, and yesterday felt much like those days back in february where there is some concern, a little bit of anxiety but also hope that the underlying economy is still correct me if i am strs
something we'll get through. the market tends to correct and recover quickly. maria: what are you seeing in terms of investor flows right now? >> i think we're seeing the market react to some of the global news that's out there. obviously, the chinese stocks overnight suffered as well, and so you're seeing some of that shift into places that are a little more secure. so yesterday the stocks a little better were utilities and things like that where there's more comfort. overall, we've still had a good year even in the ipo world. so i think the market's going to react and move on. maria: let's talk about the ipo story and what you're expecting. it's been a slow couple of years, actually, when you look at new deals coming to market. what's the book look like going toward in the -- going forward in the coming year? >> yeah. it's been a slow couple of years but on a trend upward n. 2016 we definitely saw a slowdown in the ipo market. 2017 it recovered, and already in 2018 we've exceeded the amount of proceeds raised over
2017. so we're seeing a much better year to date so far. we're on target to outpace 2014. and so that's really, i think, a positive sign in the ipo market. we've seen over 50 deals come to market, you know, raising over $26 billion. so i think there is a lot of good -- there are a lot of good stories in the ipo world. maria: what's most exciting that you're expecting in the year ahead that you can talk to us about? >> well, i think there are -- have been already -- a number of tech companies that have come to market, and we have a few that are scheduled for the rest of the year. the pipeline is strong, and there are a lot of companies that'll be watching the markets closely to make sure it's still an environment that's the best time to come public. we still have a strong pipeline. maria: we talk about it in such a generic way. let's dig deeper and really explain what goes on in materials of these ipos, why it's important. this is raising capitals for companies to actually prosper and do well and smaller companies becoming bigger companies.
>> yeah. and the reach is so much broader than that. our core mission here at the new york stock exchange is to help great companies raise money so they can go out and change the world. that's a good thing. and at the same time, they're providing opportunities for investors to share in that success. maria: next week the securities and exchange commission is going to hold its round table on market data and securities information processer. what are you expecting in terms of this round table looking at market data and how much is that going to cost you? is that going to raise fees for the new york stock exchange? >> no, i think what's important to understand is that the equity market structure has shifted a lot over the past ten years. and a lot of that's been driven by changes in technology and changes in the regulatory landscape. the beneficiary of those changes has been the end investor. so their costs have come down dramatically. so the modernization of the markets has really helped the investor community. what it's done though at the same time is created more fragmentation in the market and some challenges for market professionals. so some of the issues that are
debated that you mentioned, things like market data and the sit processer which is the mechanism for everyone the see what the public quote is out in the market across all exchanges, those create more complexity. and there's a desire to simply fay some of that -- simplify some of that. but that really impacts the wall street firms. i think it's important to understand when people read about some of the things debated in the equity markets today, the end investor has it better, main street has it better than ever before. but there's some negotiating going on in wall street. maria: market data has been critical for investors to empower themselves in terms of investing on their own and not paying incredible fees for themselves to the broker-dealer community. tell us about the market data and how you've changed data, how you've generated more data for investors. >> right. the value of data has changed dramatically over the past decade. as trading has been fragmented across lots of venues, you need to stitch the market back together. so even professionals are trying
to figure out what is the value, how is price discovery unfolding so that you know as an end investor, you log into any of your online trading accounts and see a realtime price for each individual security that's traded without spending a dime. so that's a good result. maria: let's talk more about fees for a moment, because the last time we spoke, we were in the studio, we were talking about the securities and exchange commission's new transaction fee pilot. >> right. maria: you were going to washington to speak with influencers and try to get them to understand that it's putting the new york stock exchange be at a december advantage versus -- disadvantage versus wall street, some of the other big firms. >> yeah. and more importantly, it's putting the companies listed on the new york stock exchange and their investors at a disadvantage, and that's the concern for us. we want to make sure that we've lobbied for them and made their positions clear. many of those public companies have written letters to the sec asking not to be included in this pilot. they don't want to be at a disadvantage versus their competitors.
there are already so many challenges that they're competing on, you know, so many different vectors they're competing on with their own peers, they don't want to add one more. and so we read through all the comment letters. it's been a very long process of where the sec has asked for comments from the industry, both companies, investors, institutions and intermediaries, and we looked through all of those, and we felt like there was a compromise that could be met. so we just submitted last week a letter asking the sec to consider an alternative pilot that would benefit, you know, achieve a lot of the goals that they're looking to achieve with the transaction fee pilot, which is to bring costs down, but at the same time not to disadvantage the companies that are listed on these markets. maria: how does this new compromise that you put forth, how is it resonating, and when are you going to get some information from them in terms of what they think of it. >> in our conversations with issuers or with investors and with a lot of the sell-side broker-dealers that are part of this conversation as well,
they've had a very positive reaction to our proposal. because it does create a bit of a compromise that says let's bring fees down, but let's keep all of the other fees steady so we can really see what the impact is. but we don't want to hurt spreads. we don't want that public quote to widen out because that means investors are getting worse prices. that's one of our primary focuses, to make sure at the end of the day any changes don't end up having a negative impact on issuers and investors. maria: we're in this spat with china, and for a long time it was chinese companies coming to the new york stock exchange as a major, major growth opportunity for new york and for the u.s. certainly, the new york stock exchange has a lot of chinese companies traded here. have you heard any ideas out there to put a limit on the number of chinese companies that can come public here because we want to retaliate for china's bad behavior? >> no, i haven't heard that specifically. if you look at this year to date, about 33% of our proceeds, ipo proceeds have been raised
outside of the u.s. from companies that are based outside of the u.s., and china's been leading the way on that. we're still a very welcoming place for china to come raise money in the u.s. i think it's an area that's closely watched. maria: my thanks to stacey cunningham. don't go anywhere, more "wall street" right after this. ♪ ♪ why bother mastering something? because when you want to create an entirely new feeling, the difference between excellence and mastery, is all the difference in the world. introducing the all-new lexus es. a product of mastery. experience amazing at your lexus dealer. hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing)
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♪ ♪ maria: get ready for a big week of earnings next week. that'll do it for us this weekend. thanks for joining us. next weekend, tim ryan, my special guest. to join us. i'll see you sunday morning on the fox news channel, "sunday morning futures." congressman jim jordan and congressman john ratcliff, my special guests. catch the program live on fox news at 10 a.m. sunday morning. plus tune in every weekday and start smart, weekdays here on
the fox business network. 6-9 a.m. eastern for "mornings with maria" as we set the taupe for the day. i -- tone for the day. that'll do it for us right now. thanks so much for joining us. i'll see you again 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.