tv Maria Bartiromos Wall Street FOX Business December 8, 2018 9:00am-9:31am EST
be sure to send me your questions and any property stories at email@example.com. i'm bob massi, the property man. i'll see you next week. [ woman vocalizing ] everyone. jerry baker's interview with john bolton right here. from the fox studios in washington d.c. this is "maria bartiromo's wall street." bre happy weekend from washington. welcome to the program that analyzes the week that was and helps position you for the week ahead. i'm maria bartiromo. joining this week from washington d.c.. we have another star-studded program this week. coming up in a few moments capital market ceo doug mcgregor will give us his take on what was another wild week on wall street. then later one on one secretary stephen mnuchin is just ahead. hurst davis standing by with the big headlines from everything from wall street to main street, deirdre.
deirdre: volatility rocked the markets all three indices villas -- finishing well into the red completely wiping out the doused 20 teen gains. monday led off on a high note with stocks jumping more than 1% after reports of cooling between the u.s. and china after president trump and china's person xi jinping had dinner on saturday. president trump tweeted out a message calling himself -- that sent stocks tumbling on tuesday and the dow dropped more than 3%. markets closed for the funeral services and honor president george h.w. bush. investors are renewed selling on thursday. the cfo of chinese tech company while way was arrested. the move escalates tension between china and the u.s.. the dow fell again losing more than 800-point before midday limiting some of the losses in the afternoon on the idea that the fed may raise rates more slowly than previously thought in 2019.
a lot of these trade volatile orioles dropped 3% before opec's decision to cut production on friday so i'll did revamp on friday but even with the bump of loyalist nerds lowest level in more than a year. gm ceo mary barra met with lawmakers to explain why the automaker was laying off workers at their plant she spoke with "fox business" exclusively and said the move was required to ensure the company evolved and survived. president trump said publicly he is disappointed with her decision. maria back to you. maria: thank you deirdre. the november jobs report was released friday and while the unemployment rate held steady at 3.7% 155,000 jobs were added to the economy in november. that was lower than expected number of 200,000. what is a show is about growth and should we be concerned? the head of investment for city private bank david bailey joins me to talk more about that.
david it's that. david's good to see you thanks for joining us this weekend with your reaction to the november jobs report. >> it was a decent jobs report and had certain advantages that things are going crazy. he looked beyond the number that jobs growth was good but also people were returning to the workforce was good and we were modestly up consistently at 3% year-over-year which is the wage growth that is in everyone's sites. i would describe it as a good report not particularly disappointing and will make the fed do one thing or the other. maria: the big issue for the market now it's been interest rates and we saw the markets trey wildly this past week in the 10 year yield drop below 3%. you also have the issue of china and its trade talks in the trade issues. tell us what is the most important from your standpoint in terms of the stock market and how do we get back in 2019?
>> we are in the process of. >> bank. there is our three key things we are focused on what is making a cash for carter masson festers do that this week. he saw the short end of the curve do extraordinarily well and october happens to be in short duration treasures where people are paid a lot of money for fixed income. over the course of the year we think rates are going to continue to rise and we also think the fed is going to have a consistent path which to answer one of your earlier point it's important for people under stand we don't know what the feds are going to do but it's probably unrealistic to expect they are going to raise rates two, three or four times over the course of the year. investors by the end of the year will extend duration of their portfolios. that's our expectation and making your cash for carter is really important. to answer your question about what investors should be worried about it's all about earnings
and no one is talking about them. our expectation is earnings will be up 8%. we think equity by the end of this year will be up seven to 8% and that's really the core of what we are doing. the question is can investors tolerate the volatility day-to-day? >> i know you're expecting a slowdown on a global basis but you mentioned earnings. we just came off of the third quarter were third-quarter profits were up 29%. what a great number, 29%. now some of that was a tax cut plan. now you are talking about the% profit growth in 2019. maybe that is what is scaring investors. that's a big drop off 29% to 8% overall. why are we seeing such a drop-off in profits? >> i want to put this in context from the people watching. if you look over the course of your earnings are up 20% on average, 8% of that is the tax bill itself which is a one-time event.
you take that out and you end up with 12 or 13%. go from 12 or did team to a normally state that is actually good because the economy doesn't sustain attacks pending for a long time. the other thing describing growth in the u.s. is our share repurchases increased dividends things that are really being done at out of it investors. those things are also driving the u.s. market. while it may not seem exciting given what the last 10 years of look like dividends included you had a particularly good run especially the underperformance we saw in 2018. maria: dave decides a pleasure to see you. thanks so much. david daily joining us. my one-on-one with doug mcgregor. he has the information from the trading desk in my interview with stephen mnuchin stephen mnuchin, the treasury secretary. stay with us.
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(avo) living longer is possible. it's tru. keytruda, from merck. ask your doctor about keytruda. maria: joining me to talk about the chaotic week for the markets and what is ahead doug mcgregor. it's great to see you and thanks for joining us. i want to point out the market value of over $100 billion the royal bank of canada's largest bank, the largest company in canada the tenth largest bank in the world rbc capital markets posted its best year ever in 2018, up 10% from last year. the guess since you taken the helm you went from earnings of 1.25 billion dollars to $104 billion preview of the great damage point in terms of capital markets. what was going on in these markets were received one day down eight and appoint another
day up to the volatility in the nervousness is real. >> yeah. the markets are much more volatile or -- volatile than they were a year ago. year ago we were remarking that markets were reacting to any news. now seems there is all sorts of news being reacted to. today there's an issue between china and the u.s.. this trade issue is ongoing. getting inflamed by some of the more recent events. what is that about? it the 5 hundred billion dollar plus assets applied to them pay people are anticipating slowing down the economy so that's an issue. i was in the uk for the last couple of days in brexit is very real for the uk and europe. that is really having a significant effect in europe right now. the flattening of the yield curve and is that why we are going into recession?
you have seen a pickup volatility. feels a little late cycle and the markets are certainly reacting. maria: you mean late cycle in terms of the economic recovery in the late cycle of fact, cycle of the economy but what are you hearing from clients clicks you get this opportunity to talk to the big-money investors and watch what they are doing to reduce their sentiment shift clicks is there something that is change materially? >> i think it depends on what sector of the economy or what sector of the market you are talking about. what i'm seeing is we are finally seeing some basis point move in credit and there are some widening going on web for its leverage finance, business and leverage credit or corporate credit. we have had tight credit spreads for a long time so some of the volatility inequity markets are spilling into the credit markets and that's really the first time frankly it has been sustained like that for years really.
in equity oil is the big story. so big story in canada and so big business in canada and the price of oil if it continues to move in the wrong direction and that is down you are going to see credit problems and high yields and issues with oil and gas stocks. his technology getting cheap? is loyal getting cheap? our customers looking and saying where's the opportunity? we are seeing some of that as well. maria: it's a good point you make as to oil but you could then look at oil and say it's down 20% and that's a positive for the consumer because it's going to cost you less to heat your home and fill up your tank. on the negative this level is threatening sheer producers. setting their profitability and there could be a story when you look at oil this is the economy is slowing. that's really where i want to
get her notion. you think there's a structural change and what your clients believe? are they expecting a real slowdown? >> i don't think the client see a recession. i think they are seeing economic growth in the u.s. and maybe slightly less in canada. think it's more about valuation. i think really we have had a long dull market in equities and credit and i think people are concerned about values. it's backing off. the s&p is backed off two or three points over the last month and a half and now we are more into average territory. maria: let's talk interest rates for a moment. people worried when it fell below 3% indicating data suggesting a recession. for some reason the moves correlate with worries about slowdown in a recession.
>> if there's a lot of discussion about whether or not it's a reliable indicator for recession and if it is how long until a recession comes after a flat or inverted yield curve. right now we are.inverted. we are almost flat. i think it's really about people's expectations reflect it in the long-term rate and we will have a slowdown and that's why the flattening is happening. it has been a reasonably reliable predictor. the timing isn't particularly reliable. maria: 3.5% economic growth in the third quarter. you are dealing with big clients in the capitol markets business dealing with mergers and acquisitions new deals coming to the market as well as trading and investing. what does your business tell you? >> while they are a couple of things going on that are quite interesting to have the biggest shift that i've seen are the public markets in the private
markets. private equity asset managers have accumulated so much capital over the last couple of years in the capital rates have just multiplied. what we are seeing is still sustained activity by the private equity investor, the black stones of the world or asset managers like rick fielder silver lake. there's another shift i think really in our business towards the private market activity from public. maria: i remember talking to you during the height of the slow down and look where you are now in terms of earnings, in terms of the strength of your business, much better. >> one of the biggest factors for the capital markets part and this has been the growth in the u.s.. then a real focus of ours. over half of our revenues and earnings are in the u.s. now. if you take a look at the u.s. capital markets they are the most robust in the world the most liquid and the best opportunity in our business. and the gdp growth in the u.s.
and just the market structure is quite good. maria: we will leave it there. it's great to have in the program doug mcgregor chairman and ceo of rbc capital markets. don't go anywhere. my one-on-one with treasury secretary stephen mnuchin is up next. can the u.s. and china sustain their trade agreement? their trade agreement? maria
their trade agreement? maria comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?"
"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. maria: welcome back to the u.s. and china taking huge step forward this week. the two superpowers came to a tentative agreement to fully hammer out a trade deal in the next 90 days.
this book with treasury secretary stephen mnuchin about the progress they are making with china and what the administration needs to do to seal that deal. >> we have a lot of work to do but i think this is the first time we have had a direct agreement between the two presidents. president xi and president trump everything president xi made strong commitments on changing structural and nonstructural issues and if we can get this negotiated and get a real agreement i think this is the single biggest opportunity for u.s. business and u.s. workers. maria: it sure is. talk to us about the issues because we have been talking a lot over the last year and a half as the president has had yourself about the intellectual property theft come about the forced transfer of technology, but the idea that china has to open up its markets but then of course there's the whole trade issue and china buying more stuff from the united states. you expect those other big issues like the transfer of technology, to be addressed over
the coming whether it's 90 days or beyond? >> maria let me be clear on this i think there has been some confusion. i think president trump has always been focused on the structural issues including technology and what he has always said and we have said to china is that if we can correct these issues and they open their markets the trade deficit will take care of itself. there are specific discussions that have to be about making structural changes. it isn't just about creating purchase orders but having said that there are also specific commitments in near-term, on agriculture, lng, industrial products, autos that china has come back with specific targets that they think they can meet. i think those are very big commitments. they put on the table as i
mentioned additional purchases of $1.2 trillion. if that is real and again we have to have a negotiated agreement to have this on paper but if that is real that will close the trade deficit. it will be the structural changes that lead to u.s. companies being able to compete fairly in what is a growing chinese middle class and this is a great back in domick -- maria: in other words they verbally agreed to buy $1.2 trillion and more things are nice states. tonight they have said these are targets and that is their expectation and in the short term there would be very specific commitments. we are in the process of now trying to go to the agricultural commitments. i will be the first thing that gets addressed in the next few weeks and bob lighthizer will be leaving the specifics in negotiating this with ustr putting it into a legally
binding agreement. maria: i recognize secretary these things do not happen overnight. china really looks at things over the long term so how long will you give it in terms of a change in behavior on the other things like intellectual property and opening up their markets to foreigners? >> there are 142 structural items we have discussed in great detail. our expectation is phase one will be implemented immediately and when i say immediately that's part of the 90-day negotiations with specific timeframes, specific commitments and phase two will be very quickly as well. maria: secretary mnuchin let me turn to grow tickets and all of your policies and to have stepped into this job your number one priority has been economic growth, getting the numbers, growth numbers up as well as creating more jobs. economists are worried as you know of a slowdown in the next
two years as we head into the 2020 election. do you expect this economy to slow down in the next two years? >> maria when we got here people were talking about 1.5 to 2% gdp we said we could get 3% or higher and people laughed at us. we have had gdp over 4%. we have now headed gdp number of 3.5%. what we said is sustained gdp of 3%. so i think we are comfortable with those numbers. if people are talking about a slowdown from 4% of course the number we have always focused on is 3%. i meet with business people all the time. when i got back from the trip i met with a bunch of business people on sunday night. i hear a very strong outlook that is obviously uncertainty about this trade issue. that's all the more reason we
have to negotiate a deal that is a big win for u.s. business but i think if we are successful on that and we get it passed to think the economic outlook is incredibly strong for 2019 and 2020. maria: my thanks to treasury secretary stephen mnuchin. don't go anywhere. more wall street coming up next. comcast business built the nation's largest gig-speed network.
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start smart every weekday on fox business. tune in at 6:00 a.m. eastern to 9:00 a.m. eastern for "mornings with maria." have a great weekend. thanks for see you again next time. [♪] ier * i'm gerry baker. last week president trump traveled to argentina to meet with the leaders of the world's biggest economies. the big news was china as president trump and president xi jinping agreed to hold off on further tariffs. but during that summit much of the focus was on what didn't happen. clawing planned meeting between the president and vladimir putin that was canceled. also unresolved.