tv Boom Bust RT February 14, 2019 3:30am-4:01am EST
empathies investors might be impacted and later we take a look at the fear factor but maybe not the one you're thinking of worst rashard is back on the program to demystify the vix the volatility index all that in our sights but first we had right there's a mad line let's go. the race to blunt the impact of brecht's that leads our global report today as the governor of the bank of england makes a dire warning about the consequences of a no deal brecht scenario for the united kingdom and the world on tuesday the british central banker mark carney said at an event sponsored by the financial times quote we should not be under any illusions no deal breck's it would be a shock for this economy and send a signal globally about the prospects of reef found in globalisation meanwhile prime minister theresa may is pleading with parliament for two more weeks to somehow coax a better offer from e.u. negotiators a motion to that effect is expected to come to the to
a vote in the house of commons on thursday the deadline for the u.k. to leave the european union deal or no deal or perhaps ricin their previous notice is marched on march twenty ninth that's forty four days from now and turning to the continuing troubles of argentina's economy large protestors blocked traffic in the capital one of saris today the demonstrators cited grievances including high unemployment and budget austerity under president makris credit deal with the international monetary fund austerity measures to keep i.m.f. credit flowing include increases in the cost of public utilities water electricity and heat a delegation from the i.m.s. was in point of sorry is this week to review the status of the fifty six billion dollar package of conditioned credit the economic protest of not only develop despite the macro administration's tentative success in stabilizing the value of the peso and domestic inflation. and spain is facing the real prospect of a snap election as the. issue of catalonia do you realize the budget process and
wales the political playing field today the minority government of current prime minister nominal socialist pedro sanchez lost the support of a catalonian nationalist party on a key budget vote placing the government's grip on basic functions in question mr sanchez pledged dialogue with catalonia and leaders during the campaign but failed to deliver leading to splintering of his government meanwhile the beginning of the trial of a dozen leaders of the independence movement made the issue of cattle lonely ultimately unavoidable for the prime minister the decisive question for the spanish budget and government now seems to be just how soon mr chen sanchez will call for new elections whom busters in spain may recall that mr chan sanchez became prime minister last year only after two largely inconclusive elections and almost a year of political negotiations. and regular viewers know that our motto here is the numbers matter and one number that certainly matters is rising is raising
eyebrows seven million that's the number of americans who are at least ninety days late on a car loan payment according to a report this week from the us federal reserve bank of new york to see why that number matters let's pull back to look at some perspective the report authors point out that seven million card notes over ninety days past due is a full million above the number of past dues in two thousand and ten when the united states was still reeling from the wreckage of two thousand and eight crash savvy market watchers will note that the car payment metric can serve as a proxy for economic desperation as workers who drive to their jobs understandably prioritize payment on the key item they need to get to work for getting paid and here to discuss is the delinquent the delinquency rather and whether or not these things are really warning flasher is for credit and for our economy and the impact of the new tax law in the united states is a professor of economics a meritless at the university of massachusetts amherst professor richard wolffe
welcome back professor good to see you again. led to the have us so i recall back in twenty fourteen professor there was all this speculation about what was the next bubble was an auto loans was that the next thing to burst and it sort of went out of fashion and out of the headlines although we've raised it a few times on the program here but today there is this new news out of the u.s. federal reserve bank of new york which has some warning flashers turned on the fed says that those seven million total or at least three months delinquent on the loans and that's at really high what do you make of it and does it concern you. it concerns me enormously as it does the federal reserve and as it does to everyone not snowed under by these arguments about the so-called recovery have we recovered from two thousand and eight yes but it's been one of the most unbalanced recoveries from a crisis of capitalism we've ever seen the folks at the top have been doing very
very well but the mass of people even if they get a job finally get a job with lower income less security fewer benefits and you're seeing the results if it were just the of unpaid of car loans it would be one thing but we're seeing it everywhere credit card debt is high students are unable to pay back the debts they've had to accumulate to pay for college the headlines keep telling us that the mass of people are in very serious economic trouble and the slightest downturn is going to take us over the edge a little bit like the downturn in the subprime mortgage market back in two thousand and seven proved to be the last straw it is a reality that our economic system is distributing goods and beds in a very ugly even way and that makes the whole system sitting on a very dangerous foundation and so i want to ask one more question about car
lawrence loans before we get to taxes and that is that and we may have a chart on age distribution of these car loans but i mean obviously the folks who aren't paying you know they they don't have the money to pay as you're saying because of the economy or what have you but if they don't have a vehicle they can't get to work so they can't afford anything else their mortgage payment etc etc to do you think professor that auto loans or the lack of repaying auto loans is a proxy for what's going on in the greater economy is that a fair fair statement. absolutely because a person who can't pay the car loan especially if he or she needs it for their job and most americans live in places where to get your food shopping done to go to the job to take your kids to school all of these things require a car it's not a luxury in many places it's an absolute necessity if they're not paying for that you have to understand it probably means they're postponing
a visit to the doctor hoping they can get by without it and as every medical doctor will tell you the longer you wait the bigger the risk that little be a big expensive sort of thing they're economizing everywhere they're not going to paint the house when it really needs it they're not going to do this they're not going to do that it's a system that wants to pretend everybody's fine but underneath it the very foundation is being removed that's why this statistic about car loans is yet another canary in that famous coal mine and letting us know we better deal with the underlying reality or else it's going to bite us in a very bad way and pretty soon well we'll keep watching that number it certainly matters and we appreciate you lending your expertise i want to shift to taxes there are some more new news out today about initial data from the internal revenue service here in the states the i.r.s. which shows that tax refunds are lower than last year by eight point four percent
eight point four percent the treasury department says whoa whoa whoa it's too early to tell the whole tale but according to president trump and those who passed the new tax law people were supposed to get a tax break that doesn't appear to have occurred for average people at least not yet what's your take professor. well you know that the tax writing process is a is a situation everybody has to understand you get the headline taxes were reduced and that's what indeed happened back in december of two thousand and seventy but what you don't get any information about unless you're a real specialist are all the little adjustments of the taxes and that's where the lobbyists who come in for the for the energy companies for the pharmaceutical companies for all of the different players they get a little change in the tax law that helps them they get this how the group gets one for them and then when they finish doing it all it turns out that these adjustments also impact the average person and when all the dust clears the cut in the taxes
you thought would bring you a refund gets offset by the consequences of all the little deals cut by the lobbyists you don't know whose behavior you can't follow and now you're seeing that in an economy as stressed as ours who cuts the deals in washington the well paid lobbyist from the well paid corporate leadership that's what determines the final outcome and now everybody's shocked by what you could have predicted once you understood how tax laws get written you're so right and you may know this statistic professor but i used to use it all the time in my my my speeches for every single member of congress the house and the senate all five hundred thirty five there are ten lobbyist in the financial sector ten for every single one of those quiet hundred thirty five and when you talk about people that represent consumers we
probably have all of them on this program i mean there is like i don't know ten of them or something there's more than ten but not that many more so the dak of the deck is stacked against them right yes and you're seeing that then there are many consequences but one of them is that now we're seeing. that when you put together all the little deals made by all the lobbyists with their favorite congress man or woman or senator when you put out against the so-called tax cut that got all the attention you end up with more taxes to pay rather than the big refunds you were led to expect it's nearly a very cruel and say our way of handling something as important as the tax system of the united states professor it's always so enlightening to speak with you sometimes it's maddening but only because you're giving us the straight scoop and we sure do appreciate it professor richard wall thanks as always for your time and expertise sir thank you as well. and we're going to squeeze in
a brief pause for the promotional cause but hang here because when we return adam mesh a better match trading group is back to tackle today's huge health headlines and how companies and investors might be impacted as johnson and johnson makes a huge acquisition and boris rashard is back to help explain that fear factor there will be no eating of bugs i promise but we will be mystified the volatility index the bit as we go to break here the numbers at the closing bell all positive green arrows on the big board today will be back in a flash. joined me everything on the alex salmond show and i'll be speaking to guess what the world
of politics or business i'm show business i'll see you then. good news local was before. most of those who heard the food you are. seeing with north korea who were going to. move. move. move showed you the snooper you live believe you look good. move muslim also these girls will give you forms for go go go. go go to shows so look i do the same you want me to show it's door to go. starts to.
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now welcome back checking in on the soap opera of the us china trade negotiations we talk about all the time in the trump era treasury secretary steven minu should is visiting beijing mr minutiae mr minutiae is a readout for the status of talks was so far so good u.s. chinese negotiators a stenciling face a very ambitious deadline of march first to reach an agreement to restructure their terms of trade but like many trump ultimatums that march first deadline has now been thrown into question by of all people mr trump his cell as mr was making his way to the negotiating table the u.s. president told television cameras here in the states that the deadline as a deadline nears quote if we're close to a deal when we think we could make
a real deal and it's going to get done i could see myself letting that slide for a little while. and turning to the quickly evolving landscape of the health care sector u.s. drug and biotech giant johnson and johnson has moved to acquire a subsidiary in the emerging field of get this surgical robotics johnson and johnson announced on wednesday that they will choir r us health for a price of a cool three point four billion dollars in cash or us was founded in one thousand nine hundred ninety five by surgeon who was also involved in founding or as rival intuitive surgical j.n.j. shares rose on the news while intuitive surgical stock actually fell in price and in that regard we now take a look at the pharmaceutical sector which continues to be happy and healthy at least for the most part joining us to discuss that and more is adam mesh of adam as trading group welcome adam good to see you again always good to see it thanks for having me so let's first of all talk about j. and j. buying this robotics for morris for three point four billion bucks i mean what does
that mean for the company that you know is known for like talcum powder and you know baby shampoo. you know it puts j.n.j. on the cutting edge of health care technology. are specializes in a robotic camera that makes surgeries simplified so if you think about a camera going inside it makes the procedure less invasive so not only is it good for johnson and johnson it's good for all future patients as well so this is one of those deals where everybody wins and do you think put you on the spot but i always feel like you're the guy to ask i mean you think it's a buy for an average investors it least in the short term or maybe a longer term body. i don't think it's going to move the stock that much i think johnson johnson's a safe stock but it's a three point four billion dollar deal in a three hundred sixty eight billion dollar company so that won't move the needle so much short term so that would influence my buying decision on that if i want to say
play that evidence then share johnson and johnson it looks like they've been going up j. and j. for the last year at least since last february so they're sort of on a high so if you say you know not everybody agrees with the buying the dips an aerial but there is not much of a dip recently for j. and j. another one in the news today another pharmaceuticals tev a pharmaceutical the are very early based company and the largest generic drug maker on the planet the company is in the news today because they're looking to get into a higher price biotech medicines which sort of surprised me what's the latest on t.v. and what does it mean for the company. so their c.e.o. when he took over in two thousand and seventeen said that he wants to move them more in the direction of biologics and what that is is it's a type of drug that's not a pill based it's more of a brewing if you think about it like that and this technology will allow them to go after specialty diseases specialty cancers that as to date have been
untreatable so it's again one of those things where the patients really want them to succeed and if they do succeed there probably get paid very well so a lot of upside here with what they're doing and the technology they're using interesting fact the tab is known because berkshire hathaway owns forty three million shares but i recently heard that warren buffett had done none of the research on that he said it's not his play so as other people are hathaway the pull the trigger on those forty three million shares so just because it says burke's year doesn't mean that's buffett approved oh yeah that's very interesting it absolutely you know i want to get to one more before we run out of time we don't always talk about this but vaccines i mean they're super important to protecting people's help obviously but they're also big bucks in big business so what can you tell us about this company that's a bit in the news just a little bit noble back in their work in back seeing development. sure and i wanted
to bring it up first word of caution i always think the cheaper the stock the risk here it is because it has yet to prove itself so this is a cheap two dollar around twenty three cents stock which to me could be dangerous because it's speculative but that does offer more upside and they've got two big vaccines they're working on in two thousand and nineteen if either of them hits it means a lot of upside for the company so i'm keeping an eye on it right now and if you've been to a do in reader any of the local pharmacies the c.v.s. that scenes are the thing people wait in line for these vaccines they're on heartless to be called so a company specializing in vaccines is definitely going to get investors attention well that's interesting so would you people have money that they're willing to to lose on this or would you recommend it may be a sort of a speculative in the best of terms a speculative bet on noble backs is a good place to put some cash in i waited to buy it so i could say without motive yes i don't on that right now but i think i'm going to pick up some because when
the floor is zero and it's a two dollars or twenty three cents if limited downside referred to hit but one thing i always say the cheaper the stock don't just buy a lot because it's cheap you know that's that's the wrong move but yeah i think there's some upside i'm going to look to get involved and we appreciate your integrity we never doubted it adam mesh of the atom measure trading group thank you adam great to see again thanks so much. well the popularity of crypto currencies is no secret among all the boom busters out there it's finally beginning to gain some serious institutional recognition nasdaq has announced this week that it will be allowing two krypto indices onto its global data service the b o x more colloquy no more commonly known as the a bit coin indexes used to measure the coins price in relation to u.s. dollars the move will make its debut near the end of this month and will offer
investors quote real time info on the currencies movements but bitcoin won't be stealing the spotlight as therians liquid index or e l x will also appear on nasdaq's data service. and we now move to mystify the fear factor we talked about yesterday a little bit in the forecast that we're going to do this and i've been really looking forward to it you know look there will be no eating of bugs here is the famous fear factor show but to help us out we are once again joined by boris rashard a managing director of f.b.i. consulting welcome back boris. tremendous pleasure to be here ok so let's first of all let's break it down for a troll just explain what the volatility index what is the vix it's traded at the chicago board options exchange in chicago of course but tell us ground level what it is so called fear factor is sometimes called fear gauge it's basically a measure of investor expectations about the stock volatility over the next thirty
days so it is derived from the stock option information that's obviously publicly available and the most prevalent indexes vix which basically you know shows you the expectations implied volatility expected volatility of equities out of comprising a set p. five hundred or so it's a ball of til the of equities out there what's a pool of equities while it's all the stocks that you know enter into the s. and p. five hundred index ok so it's all one pete i only heard stocks that volatility that and just like any other equity or just like any other commodity traded at the chicago board options exchange or at the chicago board of trade you can place a bet traders hate when i call that bets but let's be real. they place they can place a bet on whether or not the vix is going to go up or down they can place shorts they can place long term bets just like any anything else so. the big the vix had
a lot of volatility last year i went on to do programs and spoke spoke about it are we seeing anything like that in recent times a week we saw that last. you are so but give us an update on where the vix has been is it been sort of crazy well the vix right now you know down to its four months lows i mean obviously there has been a very nice recovery in stocks does that mean if it's at a four month low does that does that mean boars that that equities are pretty stable in general well generally kind of inversely correlated with stocks so that's why it's called fear factor every so on it's low if it's low generally it's associated with upward movement in stocks and we have seen a very nice recovery in stock prices since last december and therefore the vix is higher the prices are generally fall ing in equities and well in general you know it's kind of the other way around the stock prices are driving the vix in many
cases so if if there is a big correction in stocks and obviously people are rushing to buy protection downside protection on equities so they start but buying out of the money put options and you know the high option prices or the higher cost of protection against further downside drives up the volatility and so we have seen recovery in stocks and therefore you know the vix was trading at like me thirty's in the late december of last chair so right now you know it's just north of fifteen and a half percent so there was a very nice decline in the vix and that was associated with a very nice recovery in stocks. so right now it seems to be kosher but again there are. substantial concern room for concern ok it was thirty at the end of last year is around fifteen now when it gets to a high one of the numbers what were they fifty ish well if we go back to let's say august two thousand and fifteen there was a big you know slump in chinese equities and that translated into the downward movement in the united states that was in capital outflow of emerging economies
there were fears of hikes you know back in late two thousand and fifteen let's say in august you know the vix intra day you know went up as high as. so i mean on a close to close base it was trading as high as forty so by the fifty fifty is. in recent years again if you go back to january of last year again kind of inflation fears in again expectations of more aggressive fed again the vix got as too high it too high of forty so fast forward to the last quarter of last year again it was trading you know during the correction said s. and p. in october and december vix was trading anywhere between twenty five and thirty five or so so the range was very high and right now the vix said basically at the very very low end of the range that we have seen you know if you know since two thousand and fifteen and you are selling to the super well only it's a little bit of time but i want to ask you talked before about how the vix has some
correlation to crypto does that still remain to be the case well in two thousand and fifty and it appears to be the case so you know i've done some analysis and basically even after you correct for the fact that kryptos may be correlated to the level of stock prices you know incrementally by itself can drive you know some downward revisions in the kryptos i mean different types of koreans are responsive in different way but in general you know i see anywhere between three to four percent sensitivity in crypto prices so like a one point increase in the vix the price it may go down by a few percentage points great and we had shown a graph up there of your work you're the only economist i know by the way doing this work on the correlation between the and kryptos and we're honored you share it here on whom. sharda if you're going to sell to pleasure to be here again thank you thank you and that's it for this time you can join us again at any time you want on directv channel three twenty one dish network channel two eighty or streaming
twenty four seven on pluto t.v. the free t.v. have channel one thirty two or as always hit us up at youtube dot com boom bust our to. so long for now see you next time. so what we've got to do is identify the threats that we have it's crazy confrontation let it be an arms race off and spearing dramatic developments only really i'm going to resist i don't see how that strategy will be successful very critical time time to sit down and talk.
she'll begin. still the president miles from the. independent. of the state with. me to day. was to sit in my love and respect to let him to me or the now with jamie as a hunk on the only. now at the five the. hill i don't known him for that matter i. see let him to make the point i mean for the only measure how controlling closer he got because of me as you said when i went to luton.