tv WSJ at Large With Gerry Baker FOX Business July 12, 2019 9:30pm-10:00pm EDT
business start smart enjoining six to nine eastern with monday mornings with maria. i will see you again next time. ♪ hello and welcome to the wall street journal at large. it keeps rolling on. when they just stuck it to seal it hit record heights. jay powell the chairman of the federal reserve all confirmed what the central bank has been hittinhitting at. later this month after two and half years of steady increases. congress mr. powell used usual coded language to signal the change. >> in the june meeting, many of
the participants saw the case for a somewhat more accommodative monetary policy stance had tricked them. since then, based on income data and of developments it appears uncertainties around the strength of the global economy continue to wait on the u.s. economic outlook. inflation pressures remain. >> this is an abrupt change in the last six month or so. a year ago the bank told us that rates will keep going up for the foreseeable future. >> with a gradually returning interest rates to a normal level as economy strengthens is the best way the fed can help sustain an environment in which american households and businesses can thrive. gerry: what has changed. some think the fed is responding for criticism of donald trump who is been vocal for some time. they said they should not of raised rates as much as they
have. and some say mr. powell and his colleagues had had a genuine change of heart on policy. the chairman said this week as you heard, there is warning signs that the economy is slowing and some pessimists even fear the recession could be in the future. perhaps the biggest reason is inflation rate or the lack of it. the fed has repeatedly overestimate the price increases over the last few years. one years it has been raising rates. it looks as though it may have broken. mr. powell acknowledged that this week and announcing to the fed main interest rate which is after the recent increases we have seen, stubble of 2.5%. that rate can even go lower interest rates are indeed headed down. what will this mean for the broader economy and financial markets. what is the business outlook ahead. what makes big growth areas for the u.s. economy. i am joined with a prominent investor, with the cofounder of
silverlake capital which created the biggest tech companies in the world. interment of an investment firm. in an director at the federal reserve bank in york. thank you very much for joining me this again. let me start with the fed, he heard chairman powell and saw the market reaction. they are worried about the economy, trade tensions and other things of cutting interest rates. all these worries actually result in the market reaching new highs. like the interest-rate part. what is more important in the balance. concerns about the economy or the fact interest rates will go to our customer. >> i think there's concerns about the economy. if the fed chooses to reduce interest rates. and i have no doubt if they do that it will be because of solid and thoughtful and deeply recent economic analysis. gerry: you don't think president trump is leaning customer. >> 0. i think that is bad news. the markets think that the rates
are going down. i think it's bad news because it means the economy is leaking in the fed's point of view. he articulated it is about trade tension, that's a politic kind of thing about the weakening of the global economy. that is .1. in .1 that this would not be a good sign if it's acting for subsistence reasons. in the second, the most interesting thing in the most recent increase, the reaction to the most recent increase is how the financial market particularly the equity markets cannot digest it. it suggests that even though equity markets are high they're quite fragile. that is another piece which is worth a bit. gerry: we are right we should be worried about the economy. markets have been continuing to go. president keep tailing great success and it would've been
better if they wouldn't have raised that much. >> i did not say we should be worried, i said that's what the fed was signally if it did that. in fact i think the economy, the u.s. economy is probably in good shape. remember, first of all, economic data is backward looking in markets are forward-looking. so there can be a meaningful difference between the data today and the forecast of the future. people contacted complete this. gerry: that will be short-term and will get back to reasonable growth, to remember that? >> the economy has been on a 2% trend pretty much the last ten years. it was induced artificially to just below 3%, 2.9 by a trillion. gerry: it clearly has not.
we're going back down to the trend and none of the promises about animals. in the cash coming back in investments being made in those sort of things, the only thing that is been carried the u.s. economy recently is consumers in the business sector. it is not stuck at present, there is one scenario where 2% could be looking pretty good. which we can talk about if you like. but the economy is slowing is a very short-term point of view. they have the same pace, it is going back down to its trend pace of about 2% which is probably a consequence of low trends and demographics prayed. gerry: that is historic back the fed is concerned about the other issues. >> what he said trade tensions in the global economy, not the u.s. economy. that is my point.
it is still feel like the u.s. economy continues to have major elements that have driven it for the last ten years continuing to go forward in we will look back on and see them major fiscal stimulus done by the chopper ministration as a blip. the u.s. economy feels pretty good. ethical economy that has an impact on the u.s. economy to protect it. and the more market tensions around trade. the fed policy is supposed to seek financial markets with transition channels not as them themselves. many missed out. we think it's all about influencing markets. it's really about appointing the real economy. gerry: you also have inflation, it has been the system below us. in some ways it is picking up. it is been consistently low. it looks like along. moved into suppressed inflation. is that where this road is for the long term?
>> maybe we can talk about that after the break. but if you look at the economy right now what you have are two major influences, trade and technology that are muting inflation. >> we will take a break right now. please stay here. we will take a close look at the economy and a little bit further at inflation and some of the other issues that ben and i were just talking about. stay with us. ♪ the same, but some give their clients cookie cutter portfolios. fisher investments tailors portfolios to your goals and needs. some only call when they have something to sell. fisher calls regularly so you stay informed. and while some advisors are happy to earn commissions whether you do well or not. fisher investments fees are structured so we do better when you do better. maybe that's why most of our clients come from other money managers. fisher investments. clearly better money management. too many people a restless night's sleep.
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gerry: i am back glenn. we were talking about inflation. and you think inflation is essentially suppressed for the foreseeable future. but the relationship seems to be burning them with no on appointment and accelerating wages. what was going on with inflation? >> one thing you always have to take about is the investor.
and i think the investor -- if we have something wrong and if we do not understand something. what is it that we are missing. what is the alternative expedition. we live in a world which we have 2% economic growth in 1.5% inflation, to not% interest rates. in 0 productivity growth. there is another reality in a way of looking at that which is maybe what we are missing is productivity is growing much more rapidly than we are major net. so if you have higher productivity growth what you have is a larger economy and greater economic growth than we think. but lower inflation. gerry: even the lower inflation we are currently seeing is possibly inflated.
>> if we see interest rates with us a tuna percent. and we state inflation one to 1.5%. in the economy and the market can absorb an increase in operating when it's really three to 4% real rates. if the real world is to present deflation. in its foreign half% real, that makes a lot more sense. the way the economy is behaving and who looks at today's economy with all of the tech investing in adoption and thanks we are not going her productivities. gerry: so as you said, 2% male good, may not look good, but in comparison to much of the world for the u.s. it could be high and we could be miss missouri and it. >> we could be in misunderstanding what is going on. and if you look at this from an alternative lens, we could be missing the fact that productivity on side and were in the deflation world. is not about then, at tampa before and we been just fine.
gerry: let's give a little bit of a political context. president is coming up for reelection campaign extra, the economy is continuing expansion possibly faster than measured. on appointment as the all-time low, inflation is weak, market strong, it is a slamdunk isn't it? >> for what? gerry: for president trump. >> it is good for the market people. i wrote an article in the wall street journal in 2015 running to the 2015 election. i argued the major issue in the election campaign should not be income equality but income security. you might remember that. i don't think that's a fundamental part of the household sector just because we have very high unappointed growth, reasonable economic growth, low measured on employment in high stockmarkets. it does not mean that the average american household is
feeling the benefits of that. across united states, over a very long time. it has not grown. which means every buddy below the median by definition does have, or worse off. if you look at 40 to 50% of americans fewer report and spend all their pay every pay period and more people cannot -- people have less than $400 in the bank to spend in a case of emergency they cannot put together $2000. gerry: if you are right and productivity is stronger in the economy is growing stronger in ways they are doing better than the numbers suggest. >> they well could be. but we are seeing people unable to save, the biggest issue you see and hear from people, minimum wage is not enough to live on. they cannot put a roof over the head or pay for healthcare or afford housing.
they cannot put food on the table and having trouble making ends meet. wearing economy that is the best and worst of times. gerry: will talk a little bit more about that after break. i'll ask him what he sees about the big opportunities and what he thanks about technology in the democratic field for the 2020 presidential election. do not go away. -their béarnaise sauce here is the best in town. [ soft piano music playing ] mm, uh, what do you do for fun? -not this. ♪ -oh, what am i into? mostly progressive's name your price tool. helps people find coverage options based on their budget. flo has it, i want it, it's a whole thing, and she's right there. -yeah, she's my ride. this date's lame. he has pics of you on his phone.
democratic party. in a close friend of a president obama. tell us how you see the field. and what they're doing in terms of the policy. a lot of people think they're committing to a left-wing agenda. similarlsome openly calling thes the. >> one out of 24. gerry: one out of 20 for the candidates. that is true. >> he is actually going down the pulse. but the first debate, the candidates are asked who would take away private insurance. two of the ten or 12 on the stage raise their hands, elizabeth warren and mayor de blasio. so that is not a left wing group. if you look at the tangible election results. i think rather than where we are right now in this part of the season. what you see the democrats have
consistently run from the middle and the republicans are the ones on the extremes. which if you look at 16, hillary b sanders in the rock list was not elected. if you look at 2018, the democrats one from the middle. gerry: isn't medicare for all, education -- >> my point. gerry: the democratic party is significantly to the left as well as in it? >> i think the press is driving not dialogue it is very clear and much in the interest of republicans to characterize the democrats because they know looking at the polls they overcome trump's fundamental unpopularity. by pinning the other side was something even more unpopular. >> what you call socialism, the green deal, tax increases, you
could call it what you like. but radical aggressive agenda. >> our people are talking about these but not been adopted. the green deal had for both. in the house of representatives. 40 members of the house of representatives took control of 2018 for relatively radicalism of 36 matters. this is all overblown. that is my view. i would love to talk to more about politics but you are one of the worlds most famous and successful technology investors. you've created some of the biggest committees in the world. we are seeing huge -- techs are going all over the world and huge pipeline of ipos. give us when you see the tech sector, what is coming out, how is it going to change? >> i make for quick points. the first is, technology that is
growing are now flattening out. in those primarily our internet access and smart phone. they penetrated in the world has within needs. the area that was new technology in the past is now in the innovation curve and adoption curve is primarily cloud computing and being adopted wholesale across the world in internet advertising. internet advertising is going down going from 30% growth to 20% growth. but still expecting great growth. the new technology that is being developed today that is in development that will be meaningful coming in the years, the first one probably is going from the primary online to off-line or off-line to online, uber commodore, post mates, all that stuff. gerry: very quickly. >> the last one, the new
technology. it is artificial intelligence crypto currencies, and quantum computing. gerry: let me ask you very quickly. there's a lot of hostility towards big tech writer. in the efforts by the federal level and international level. to think that is misguided? >> that's a very important privacy concern of the large technologies have not addressed very well and they need to break. gerry: you think the regulation and antitrust maybe? >> it feels like something that looks like ftc rather than antitrust regulation. gerry: i wish we could talk longer but thank you very much. just ahead sports and politics. full display once again this week. do not go away. hmm. exactly.
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lease the 2019 es 350 for $379 a month, for 36 months, and we'll make your first month's payment. experience amazing. women's world cup ended last week for the u.s. national soccer team. four record for time the american demonstrated the superiority of a triple level sport. congratulations to them. unfortunately some for some on the team victory on the field was not enough. it was their job to give an unsolicited lecture. i'm not talking about the campaign for equal pay, i am sure they do deserve that. i'm talking about what we
received all week for one of the stars, megan rapinoe. sure she is very talented pale under player but i'm not sure they elected her for the market people. she told president trump and the rest of us how we should be behaving. you don't have to like the president style, a lot of people don't. but he is the president and put there by the american people. it is not completely clear what authority somebody makes by kicking a ball and somebody referring to the ethene white house has to tell the rest of us how we should order our lives and relationships. but was so many athletes and celebrities these days we have to measure their talent but listen devotedly to their views on absolutely everything. that is the world we seem to inhabit. politics and sports and sports is politics. that is it for this week be sure to follow me on twitter, instagram and albee on next week with the wall street journal at large. thank you for joining us.
♪ away with it. blake: gotta stop it there because lou dobbs is next. going to -- good to be with you tonight. have a great weekend. ♪ >> good evening, everyone, i'm gregg jarrett, sitting in for lou dobbs. a week of winning on the trump economy. it's soaring to unprecedented levels. the dow, is s&p and nasdaq all closing the week at an all-time high. plus, the american gulf bracing for another major storm. tropical storm barry expected to make landfall tomorrow morning, bringing with it a deluge of rain. the national hurricane center calling it a life-threatening situation. and president trump traveling to wisconsin today where he touted the usmca trade deal, the