tv Maria Bartiromos Wall Street FOX Business April 13, 2019 3:00am-3:30am EDT
we'd love to hear it! send me an e-mail or go to our website -- strangeinheritance.com. we're going to leave it there. i love you, sweetie pie, have a great night. >> 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, thanks for joining me. coming up in just a moment, sheila bair is with me to talk about the grilling of the bank ceos this week on capitol hill. and then later on, we are talking about the booming business of cannabis with soul global's brady cobb invested in a number of cannabis producers. but first, big banks kicking off first quarter earnings, jpmorgan chase reporting $2.65 a share, better than expected, and 29.85 billion in revenue.
wells fargo also beat expectations, reporting $1.20 a share in earnings on revenue of 21.61 billion. joining me right now to react to that is the bronson group founder and chief fs inment officer david bronson. always good to see you. >> thanks, maria. maria: what did you make of those earnings? what did you take away? >> the jpm numbers were fantastic, and one of the things that's different from wells fargo, it was every silo. it was loan growth, deposit growth, credit quality, banking franchise. e still believe literally ten years later those acquisitions of washington mutual and bear stearns are just now started to be appreciated. their competitors are not generating from these kind of additional entities they have in the fold. maria: yeah, you're right, because you had net interest up 4% on core loan growth, fees were better than expected,
expenses were also better than expected as well. they're trying to get expenses down that include $100 million in charitable contribution. even the ibd that was cost decelerated, card loss rate down year-over-year. guidance was good? >> yeah, it was. and i think what jamie said this morning on the call was that they are seeing even better things into the later portion of the year. now, i will point out they raised their dividend 40% in the third quarter of last year. this is actually consistent annual dividend growth every year for the last ten years, so that is the whole point we believe about dividend growth. it signifies to us what management believes about their own future. maria: so what does this tell us about the overall first quarter earnings season? because going into this quarter there have been such negativity, i mean, estimates went all the way down to down 4% year-over-year in the first quarter. do you think we're going to actually report or see reports of better than expected, lowered
estimates? >> you put it absolutely right. [laughter] we will end up for quarter one only having negative earnings growth, and i think it will be 1 or 2 handle, not 4 handle. but i would be careful on the first day, but sometimes the bank come out with bad numbers and it ends up being a great earning season -- maria: it's true. we don't know. >> we don't know yet, but going into the end of the year, revisions are coming higher now. they were overdone in q4. maria: but the guidance is really important because a lot of people on wall street that i'm speaking with are telling me, maria, we all know what went on in the first quarter, we remember what happened at the end of '18 with that bad market, and we're looking ahead to 2020. is that true? >> oh, it's true now, but it's also true as a function of markets. they have what we wall discounting -- we call discounting mechanisms. we already knew that q4 had challenges in credit markets.
the fed now on their hands, q1 was interesting because market pricing really came higher, but the fundamentals inside company operations we doesn't know. now we're going to hear more. but if you look at what jpmorgan reported, i think the u.s. economy is healthy, and i think margins are still holding in tight. how many times do we get to see that, 5 earnings growth, 5% revenue growth. margins were completely find. maria: you think overall the year is going to be better than expected. this is just the first quarter. you think overall for 2019 we're going to see a positive showing. >> i feel that confidently with one caveat, if phrase war is not resolved, all bets are off. cap-ex is the big thing we look to. if that doesn't accelerate, then that changes our projection. maria: you had very strong numbers on china at the end of the week. exports were up strongly, much better than estimates.
you had good numbers from jpmorgan and wells, the bank earnings. you had a big deal in the oil sector, chevron acquiring anadarko for $33 billion, $65 a share on anadarko. it seems like you've got more and more good news coming out, and i said this last week, everybody's got their head on fire looking for this recession. it's not happening! >> you also have credit spreads that have tightened dramatically, so how do you have a recession when credit's flowing that way? i think the caveat is still about the trade war. that could change things. but it's not just that 2019 doesn't foretell a recession, it's that 2020 doesn't foretell a resession. right now unless you have a total evaporation of business investment, the economy is working very well. and a couple of the other positive metrics you didn't mention in that great list is wage growth with. maria: yeah? right. 3.2% year-over-year. >> and it's really going to tick higher to 3.4% this year, we
brief, and there's productivity that is absorbing it, so we just think you have a great u.s. economic backdrop, and earnings can is reflecting -- earnings are ea frequenting that. maria: i want to share something with our viewers. europe is improving. i want to get your take on this, because i'm hearing from a lot of sources who have been in europe, now, for a while we were saying they're lucky to get 1% economic growth in the eurozone this year. it's not, obviously, a complete turn around, but we're seeing some signs of recovery in europe. that's a big deal. >> it is. and it also doesn't need to be recovery in europe, it just needs to be not as bad as people expected. maria: i think that's what we're seeing, david. >> they're probably going to administer stimulus, by monetary stimulus i mean slowing down what he had talked about doing. i still have a lot of question marks about europe going forward because that uncertainty lingers. long term we don't believe the euro currency is sustainable. so it's difficult to make a big
long-term bet there. but to your point, maria, if it isn't as bad as people expected this year, that bodes well for u.s. equity investors. maria: all bets are off if we get more tariffs there, however. [laughter] >> i'd like to think we're not going this. maria: thank you so much. stay right there, former fdic chair sheila bair, my guest after this break. ♪ ♪ >> big banks on the hill, congress grilling the executives of some of the world's largest banks, and it got heated. >> signifies that it's still ically popular to still -- sill politically popular to beat up on bank leadership. >> when maria bartiromo's "wall street" returns. ♪ ♪
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seven largest u.s. banks on capitol hill this week. executives from jpmorgan, morgan saks, among those grilled. watch. >> i represent kids that go to jail for jumping a turnstile because they can't afford a metro card. do you think that more folks should have gone to jail for the, for their role in the financial crisis that led to 7.8 million forecloses in the ten years between 2007-2016, mr. dimon? >> i don't think people should go to jail for jumping a subway. i think we put too many people into jail, and i think if people broke the law, they should go to jail. >> i'm concerned that several of these institutions are simply too big to manage they are own operations, too big to serve our communities and too big to care about the harm they have caused.
maria: joining me now to react to that is former finishing -- f, the ic chair sheila bare. it is goo -- sheila bair. good to have you on the program. what was your reaction to what you saw this week. >> >> yeah. well, i thought it was kind of the shaming of the big bank ceos. i think there were some lost opportunities there. it seemed like somewhat of an unguided hearing. there was no common theme with the testimony or with the questions. so i think there's some real issues where the ceos could have been engaged that maybe there were system missed opportunities, but overall i think it signifies it's still politically popular to beat up on bank ceo leadership. [laughter] maria: that's exactly right. it's popular, and they want to show they're in charge and they're tough. let's talk about the real issues at hand. what were the missed opportunities? what should have been discussed at that hearing that really are the things that affect the american people? >> right. i think the stability of the financial system, and we're very late in this economic cycle, so
when the inevitable downturn comes, how well those banks prepare prepared not only to stay solvent, but we want them to be able to continue to lend to support the economy in a more distressed economic environment. i don't think they're prepared. i think right now the regulators should be asking them to increase their capital buffers so they do have the capacity to expand lending and credit availability when we get into an economic slowdown. that's the kind of discussion i would have liked to have seen, and we didn't really get it. maria: the banks will say, look, we have enough capital, we've been through the stress tests, we want to resume paying dividends and buying back stock, which they have been, by the way. >> yeah, they actually deplete their capital a little bit last year, so is that's, again, directionally -- maria: you still think they need more capital? >> i do, yeah. there's still a lot of leverage. they have increased capital a lot, but they were starting from a very, very low baseline. so the minimum standard, called
the he range ratio -- which i think is the most effective capital standard -- only requires they fund themselves with 5% equity. so so 95% of their risk can still be funded with debt. to suggest that somehow this is stable, i think, misses the point. they're safer, but i don't think they're safe enough. maria: and you're concerned about leveraged lending. >> i am. there's this huge market now, $1.3 trillion which, ironically, was about the size of the subprime mortgage -- can and these are loosely underwritten loans made to highly leveraged companies. we're hearing the same thing that a lot of these are originated by nonbanks, they're still selling the risk off to investors. we heard exactly the same thing during the subprime crisis and, of course, the risks and losses did come back to the banks. i think the economic impact if and when these loans go bad, and they probably will because, again, they're very risky borrowers, will be very district to the economy because these option cos represent --
corporations represent millions and millions of jobs. if the credit markets freeze up, they're going to be firing a lot of people which is, again, why our banks need to be prepared to support that system. maria: because we will have another crises. >> we will -- [laughter] yes, we will. we will have a crisis if the financial system isn't resilient enough not only for the banks to stay solvent, but to keep lending. that's really key. maria: do you think when you force a bank to hold more capital that they pull back on lending, does it have an adverse unintended consequence as well? >> yeah. all the study, all independent research shows the opposite. if you look at lending through the cycle, the better capitalized banks will do a much better job at lending. if you look at 2008 and 2009, the smaller banks that had much higher capital levels did a much better job of maintaining and growing their loan balances than the big banks that pulled back dramatically. and that was one of the big contributors to our recession. maria: i thought it was really
interesting to hear former fed chair janet yellen make comments about the president's nominees for the federal reserve board. i know you've been spending lot of time at the fed, by the way, and she said individuals will find it difficult, a couple of individuals will find it difficult to come with a political view to have a great deal of influence. now, president trump wants to nominate on the federal reserve board herman cain and stephen moore. what's your take on that? >> so i think we need to distinguish different policy views from different political views -- maria: yeah, really. >> just because mr. moore in particular, i really don't know where mr. cain is, but steve moore's been out there a long time, and his views are perhaps more in line with the president's, but that doesn't mean they're not legitimate -- maria: you don't want politics on the fed. >> well, or yeah. you know, i think we need to separate those issues. they shouldn't oppose him because he's got different views or new views. that might be healthy. maria: what is your take on the
economy? larry kudlow and the administration is canning the fed to cut rates by 50 basis points. that really conflicts with what kevin hassett is saying, why would we need a cut if the economy's growing 3%? >> i agree. i think that's wrong. every time you cut interest rates, you end courage households and businesses to borrow more, and we've got a lot of debt, 3.6 times gdp, that is really high. so why you want to juice economic growth by reducing rates, that's a bad idea. we do finally have some wage growth, let's keep that going. maria: sheila bair, special guest this weekend. don't go anywhere, my interview with marijuana entrepreneur brady cobb is coming up next. stay with us. ♪ ♪ >> the marijuana business is flying high. >> it's a pretty big deal that you can now walk into a walgreens and buy cbd products.
♪ ♪ maria: welcome back. there are a lot of expectations of a booming business in marijuana with cannabis becoming a multibillion dollar industry, there is now a major push to make marijuana legal in several states in the u.s. it is currently legal for recreational use in ten states right now, and it is legal for medical use in 33 other states. i recently sat down with marijuana entrepreneur brady cobb s and i asked him about what's happening in the cannabis business today. >> you're seeing the wave sweep from, honestly, west to east. and as a lot of things have happened, you saw it get
legalized initially in california with the washingtons, the oregons, and the east coast didn't pay a lot of attention. and over the last five or so years, big ticket states in politics started to go medical and recreational. florida, ohio, pennsylvania, michigan. can you remember an election in the last presidential election the last five or six cycles where those states didn't factor in in a major way? it's a big deal because it shifts the politics and really put the gas pedal down on the expansion of the market into the mainstream. so now you have to also look at the cbd marketplace. we had hemp and cbd products, mitch mcconnell, the senate president, made it one of his top legislative priorities to have the hemp farm bill passed. farmers wanted to grow it, and the american consumers wanted the use cbd products. now you see cvs, wall between's carrying -- walgreens carrying
cbd products. that is the cannabis plant, it's just a different ca nap nowed, it's not as psychoactive. but it's a pretty big deal that you can walk into any given corner and buy cbd products. maria: so you started investing in this industry before really the regulatory environment caught up to it, and you're still this. you're lobbying congress right now about making this more legal in more states. the recent passing of the safe banking act by the house financial services committee, you think this was really one of the critical things. >> big deal. it was the first one across the line. you've got to remember for the last couple of years we haven't even been able to get a hearing on a marijuana bill in congress, because a gentleman named pete sessions from texas was the rules committee chairman. when a cannabis bill came up, he vetoed it when he lost his re-election bid, we knew we could get some interest. you have people investing
millions of dollars in cultivation facilities, you have employees working in dispensaries, and you can't run a meaningful business without access to institutional banking. how to you run payroll? how to you write a check to pay a plumber? maria: and john hickenlooper talked about the revenue potential he has seen just in colorado. what kind of a revenue story do you think comes out of this? >> look what happened in colorado. budget deficits, budget surpluses. new schools being built, infrastructure projectings. that's just in one state. maria: when to you see clarity on all of these bills moving through congress? >> i think this is no longer a tier five issue, this is a tier one issue. i think you're going to see the safe banking act mitt the house floor this summer, i think you're going to see the states act, which i've worked on with senator gardner, hit the floor in the house about the same time, maybe in the fall. maria: there's been some consolidation in the area,
tilray went public on the new york stock exchange last year, it was a huge, over the top performance. the stock soared on day one. what do you see in terms of the businesses, consolidations, mergers and acquisitionsesome. >> i think you're going to see them heat up even more. we're a state-by-state the system. in my opinion, if you're not a multistate operator by this time, you're kind of behind the 8-ball. that's not inexpensive because you can't cross state lines with product. so you have to have cultivation facilities which these aren't growing marijuana out in the woods and having seances. these are pharmaceutical-grade facilities with scientists, you know, medical professionals, cultivation technicians. they're high, they're very expensive to build. the key picking people that can scale because the american market is the biggest market in the world. qanta thought they were ready to go -- canada thought they were ready to go, and they were out of product in week one. so it's picking the folks that
♪let me go home ♪i've had my fun baby i'm done♪ ♪i gotta go home ♪it will all be alright ♪i'll be home tonight ♪i'm comin back home maria: thanks for watching this weeken. we love having you. remember, catch us every friday night at 9 p.m. eastern as the first running of this program on the weekend. and then every weekend on sunday morning futures over on the fox news channel. join me this weekend at 10 a.m. eastern live when i talk with the chairman of the senate judiciary committee, senator lindsey graham, along with congressman mark meld does. -- meadows, my special guests talking about william barr. 10 a.m. live on sunday.
plus, start smart every weekday right here on fox business for mornings with march. >> from 6-9 a.m. eastern weekdays on fox business. join us as we set the tone for the day. f f f f f f f f for joining me. see you again next time. ♪ ♪ gerri: hello, and welcome to the "wall street journal" at large. we may have learned last month that robert mueller found no conspiracy between the president trump's campaign and the russian government, but the controversial of the 2016 election shows no sign of going away. now, while we still don't know what will be in the more than 300-page mueller report, which is due to be released any day now, we do at least know it will be a colorful read. attorney general william barr said the report will come with