tv Maria Bartiromos Wall Street FOX Business December 24, 2018 7:00pm-7:31pm EST
remember, if you have your own hit or miss be sure to tweet us. that is it for this week's show. thank you to my panel. thank you all for watching. merry christmas, hope to see you right here next week. >> from the fox studios in new york city, this is maria bartiromo's wall street. maria: happy weekend, happy holidays, everybody, welcome to the program that analyzes the week that was and helps you position for the week ahead. i'm maria bartiromo. coming up in just a few moments, wall street journal jon hilsenrath is here, ceo of eli lily ricks joining us. later all-star panel, crystal ball to tell us what have market stories in 2019. first federal reserve hiking interest rates on wednesday while signaling it could raise rates 2 more times despite pressure from president trump.
federal reserve chairman jay powell responding to president emphasizing this. political considerations play no discussions or decisions in monetary policy. joining me to talk more about that jon hilsenrath, jon, good to see you this weekend. thanks for being here. >> hey, maria. maria: we also have to talk about where we are in the economy, things have been going well, the u.s. economy humming along but are things slowing down on the horizon, jon, how would you characterize things? jon: 2018 will go in expansion. unemployment rate got down to low r lowest in 50 years, that's great news. does look like things are slowing down on several fronts. one is global growth has softens, china is slowing down, europe has slowed down.
now it's upturn, one of the big questions for 2019, can the u.s. keep growing so strongly when the rest of the world looks like it's softening. maria: that's absolutely right. we started with synchronize global story and tells us we are all togetherred. brexit uncertainty in britain. fires in rioting in france. italy and budget issues, doesn't that have to impact the u.s. at some point? >> well, you know, it looks like it's starting to impact the u.s. a little bit, so the last set of -- of gdp numbers that came out, we saw strong consumer spending growth but the trade deficit was widening. it looks like the global picture is having some impact on the u.s. and then also we can't forget that financial markets are globally connected and, you know, the slowdown, a lot of multinationals that earn a lot
of money overseas, we are seeing stocks tumbling in the last couple of months. maria: fed has done a bit of a pivot in my view, first we were expecting consistent rate hikes throughout next year, 3 at least. jay powell says we are looking at 2. then the market sold off. the markets don't believe that, you know, he can stick to two given this slowdown that we are all experiencing, so what's your take on the fed, what did you hear from jay powell this week? >> i mean, it sounds like the markets wanted the fed to just say we are done to just stop raising interest rates at this december meeting and what powell said is we might -- we think we will probably more, we don't know how many and when, you know, i think one of the real important factors to watch for the next couple of months is oil prices. oil prices have come down quite a lot.
that's putting downward pressure on inflation, so as we go into january, february, march, i think it's going to be hard for the fed to -- to raise interest rates again when they had inflation numbers are so soft. it might buy the fed a little bit of time and put off any further increases until the middle of the year. maria: you make good point on oil. on the one hand the fact that oil is down 20% in just the last couple of months would be a positive for the consumer because they are seeing lower gas prices, putting more money in pockets obviously. but the troubling part of decline in oil is it could be indicating that this global growth story is a lot more severe than we thought. what do you think it is? jon: right. the oil dynamics of the american economy itself have changed a lot in the last decade because of fracking so we used to be importer of oil. whenever oil prices fell, it was good news for the american consumer, meant more money in
your pocket after you filled your car at the tank. but right now very important part of economy is driven by oil, the taxes economy, north dakota, wyoming, when oil prices go down, less rigs, less business investment. the business investment closely tied to oil prices. maria: what about earnings, jon, i know we are not seeing much inflation but there's still this issue that companies are seeing their input costs go up, commodity prices going up and that's squeezing profit margins, we had earnings growth of 25% year over year for 2018. but next year, most analysts are looking for growth in profits of like 7 or 8%, could actually go down to 5% i heard at the end of the week as well. jon: right. so there were two big tail winds early in 201le for profit
growth, first, of course, was tack cut, 35% to 21%, so, you know, everybody got a big boost there and then we also had the global growth story. well, now as we progressed through 2018 the benefits of those tax cuts, the initial really big impetus has faded but we've also gotten lower unemploymented, wages picking up, that's great news nor consumers, more money in the pockets of households and by the way we will see that at christmas time in consumer spending but it creates profit margin pressure for companies and so the combination of tax cuts and higher labor costs for companies means the profit story in 2019 isn't going to be as good as 2018. that's another thing that investors are waking up to at the end of the year. maria: for sure, jon, great to see you, thank you so much. jon hilsenrath from the wall street journal, don't go anywhere, my interview with the ceo.
maria: welcome back, the rising cost of health care in america, according to center of medicare and medicaid services americans are expected to spend $360 billion on prescription drugs this year. this week i sat down with ceo of eli lily with dave ricks and where the growth is right now at the big pharma company after very well received capital markets day they had this week, here is what dave ricks told me. >> it's happening in newest medicines which have launched in the last 5 years, diabetes the most important category for us and one of the most important
diseases afflicting americans, it's common and we need better medicines for diabetes, lily is producing those. trulicity, another medicine for pain and migraine. half are eligible for new class of medicines launched this year, we have one of them, you take once a month a shot and prevents migraines from recurring, half the number of migraines for patients who take this. breast cancer, new medicines coming there, once we launched last fall. maria: growth story is picking up, people are recognizing what you've got. in terms of the migraines, why is it largely women? >> that's a function of the disease, so women usually during the reproductive years that's where the most -- happens in men as well, 80% of the sufferers are women in middle of their life, working age and in our studies even the more moderate
patients who came in said they were having 9 migraine attacks a month, 100 migraines a year. you can reduce those in half. some women even had no migraines in a month. it's the kind of innovation we are investing and bring new medicines forward. maria: this is a real new set of diverse drugs, the drugs showing diversity and the stock actually moved -- 15% dividend increase. >> correct. our strategy is to invest as i said in the science, so r&d spending, most significant spenders of r&d, almost 25% of what we sell we put back in r&d, also look to acquire new medicines from biotech companies and we like to invest on that as well and what's left in the end we will give back in dividends
but really our main goal to build for future and now is a great time to invest in these ways to treat serious disease and that's what our business is. that's what we are here today. maria: you could be investing in biotech or make acquisition, where does that stand creating more scale through acquisition? >> all of the above. we are interested in attracting new medicines into the pipeline that can change care for patients. maria: in terms of fda today, regulatory process to get a drug through the market, have things changed from the last 5 years? >> they have. good improvements in fda. it's also good for our industry to have path through fda. commissioner has done a good job in his capacity. maria: they want the medicines now but they want them to be affordable. according to cms, 4% decline for
people signing up for affordable care act this year, what are the implications there and what about the price of drugs, how do you get prices lower? >> yeah, this is something everybody wants to see progress on including lily and the industry, the debate is how to do this. it's an interesting situation because you have drug price inflation just reported last year in the u.s. .4%. so we don't have a drug price increase problem to the system, we have a drug increase problem to the patient, why because they are paying list prices and increasingly insurance design has patients paying full price for medicines rather than negotiated price companies have with their insurance company, that's really a core issue that needs to change. maria: well, competitive landscape is such that when you have a drug on the market that's cheaper, i mean, look two of your competitors pfizer announced this week they are merging consumer system divisions, is that a bay to get prices in a better state where
you actually see companies coming together? >> maybe, that's a combination for over the counter medications, the ones you buy off the shelfs in walgreens or cvs. maria: if you need a prescription and you're sick, you need a prescription for a cancer medication, you're talking about $150,000 a year. >> in some cases those -- those are the costs, that's because r r&d is expensive and the way economics work they are paying r&d for next cancer medications, the real issue is out of pocket costs, we are for change in that model. patients are paying too much out of pocket costs. so the administration proposed a number of ways to get at this including narrowing the spread between the list price and the net pricing and we think some of those are good ideas whether it would be passing through rebates that your insurance companies
negotiates on your behalf. today they negotiate rebates but mostly don't share them with patients, this is something we do at lily for our employees, more companies should do that. maria: yeah, my thanks to eli lily ceo david ricks, more wall street after this. >> china trade tensions, brexit, government funding, the president's tweets, what would be the big market drivers of 2019, maria's al stall panel gazes in crystal balls and make predictions next on maria predictions next on maria bartiromo's wall hey kurt, are you watching the best of geico ? i sure am, linda. they've been saving folks money for years. and now they're re-airing some of their all-time greatest hits. with classics like...
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maria: welcome back, between tensions over trade with china, technology stocks, struggles as well as the government shutdown fears, booming u.s. economy and shift in power in congress it's been a volatile year for business, so what will 2019 bring for the economy, stock market and your economy, all-star panel we go, host of fbn:am, lauren simonetti is with me, host of after the bell connell mcshane. it's been a great year in terms of the economy but now there's all the worries that things will slow down, we just heard from jon hilsenrath about that.
lauren: we started 2018 year so strong, remember the economic forum, after the buzz word was synchronize global growth and then it became well the u.s. is stronger than the rest of the world and now it's like a synchronized global slowdown and that goes into at least the first half of 2019 because we have big issues that don't have resolved and we have 3 new issues handed on our plates this week. pull out of syria, the fed, hiking interest rates, two more next year and what happens with spending and government shutdown and border wall. connell: if you think when president trump took office and the overall environment, when he came in one of the first things he said, one of the smartest things he did, create environment that businesses were happy with, business friendly environment by cutting taxes, cutting regulations and now i think from talking to people who invest a lot of money, if anything the president and his
administration are contributing to the uncertainty that's out there for many -- you know, because it's so involved in many issues and lauren mentioned, china first and foremost and president trump and jay powell, so at the beginning the fed hoovers over everything and what happens with those issues, the fed hopefully will react to, for example, to me number one china trade is the big issue. maria: i agree with you. >> what does the federal reserve do, doesn't hike aggressive and if the president, the less likely scenario cuts deal in shorter term then maybe the fed is likely to stay with the course and keep hiking interest rates but they are all related, everything is related to the fed. lauren: what do you own that's fed proof and china proof? what company is that, what sector is that, i don't know. maria: issues for the market have been so wide and deep that we are seeing the wild volatile moves down 500 up couple
hundred, down 600. what do you think. lauren: a lot of people say it's algorithm. maria: i'm not buying that. connell: what are they reacting to or why are humans are taking step back and letting run the markets, because of uncertainty. if you had it wrong forever, at some point that was the some point, we will see what will be in 2019, you step back for a while. maria: take a breather. connell: political uncertainty with mueller investigation. maybe you were caught off guard, you don't know how much that affects companies earn, you say maybe it does because i was wrong about other things.
that's the environment, one other thing that i would throw out in terms of sectors and industry groups, technology will be fascinating for me to watch 2019 because technology being in cross hairs of everybody. not just facebook. those are the groups that drove the market in 2018. maria: we might see new regulation for technology. connell: i think we will. maria: because of privacy breaches. lauren: what that looks like, nobody knows. what i was excited about because of the fang stock, they have fallen, about the new tech leadership that could come with some ipo's, uber, lyft, airbnb. this could have been the new tech leadership, but kathy with renaissance ipo said cap 2019 is
closed. maria: it's closed because of what happened at the end of the year. markets turned negative. i was surprised that you had so many ipo's reading to launch in the face of troubled markets but at the end of the year some people changed their minds. some are sitting on it. 2019 does u.s. stock market futures does look like a good year for ipo's, you named a few. lauren: a lot of the companies real quick, recession, they. >> the darlings, unicorns and this was time to make debut and there's question mark. connell: this is not -- breaking observation but the thing that kind of hits me as, boy, i wish i could avoid being on the segment or i wish we weren't taping segment, can you imagine if we had one -- if we go back and --
maria: we check on it. connell: we have no idea. this year more than most that's the theme that the uncertainty that kind of played the markets at end of 2018, we really have no idea what's going to happen with china. i think it's hard to make informed guess on some of the things because there's so much back and forth. maria: these are big issues, stealing ip, forcing forcing the technology transfer, when you look at interest rates, you have to ask yourself, is there an opportunity to actually broaden out the portfolio and maybe put some money into the short end of fixed income because if you will get 3% on the 10-year or 3% onton -- on the 2-year, maybe carve out, i don't know. connell: yeah, it definitely does and should. the fed will act to unpredictability a little bit too. a -- everybody was looking ot
outlook that was doofish, he did say over and over, we are data dependent, data dependent, as quickly as the fed put this, it could flip the other way if some of the issues end up going differently, if there's a deal cut with chinese on trade or if some of the global growth projections. they are more flexible than people are giving them credit for. maria: we are looking for china, solution for trade deals. lauren: legalization of marijuana might actually happen in 2019. connell: hope or prediction? lauren: it's not a hope, i hope it does not happen but money to be had. inside folks with skin in the game, we have seen all the who's, what company is trying to get into what company, they predict it's 50 billion-dollar market by 2026 and it's only going to expand because of its federally legal you have access to banking, credit card.
maria: by the way, making this big stake in jewel. lauren: yeah. maria: e-cigarette maker and giving bonus to employees, even employee million dollar bonus, how great is that? [laughter] maria: great to see you both. merry christmas, happy new year, happy holidays, lauren simonetti, connell mcshane, don't go anywhere, more wall street after this. you might take something for your heart... or joints. but do you take something for your brain.
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program. smart weekend days on fox business 6:00 a.m. eastern mornings with maria, that will do it for us today, happy holidays from all of us fox business family to yours, merryo yours. merry christmas. see you again next time. ♪ ♪ >> hello, and welcome to "wall street journal" at large. now, from the moment the last vote was cast in november's midterms, the speculation ramped up about the next election. namely, who the democrats would run against president trump in 2020. at "the wall street journal"'s ceo council earlier this month, former national committee interim chair donna brazile was asked how many from their party would throw their hat in the ring. >> 30. [laughter] by