tv Maria Bartiromos Wall Street FOX Business November 10, 2018 9:00am-9:31am EST
and check out our website at foxnews.com/propertyman. i'm bob massi. i'll see you next week. [ woman vocalizing ] have a terrific weekend. maria bartiromo is next. good night from new york. maria: happy weekend. welcome to the program that analyzes the week it was in a position you for the week ahead. but impact program this weekend. coming up in a few moments, average capital managing partner and former host of this program, anthony's carmody will join me to dissect the financial impact of the midterm elections. later we have jim grant on with macro president and economist tiffany conboy, two great minds investing and stay with us to hear what they have to say about current markets. ashley webster is standing by.
he's dissecting everything from main street to wall street. ashley. >> thank you, maria. democrats held and hope for a blue wave this year and the midterm election, as expected, ended in a split decision. many describe as a referendum on the top agenda. the dems got control of the house for the first time since 2010 while the gop retain control of the senate. markets initially responded positively to the dc gridlock. i once ate the dow surged in a 550 points and then as i gained over 190 points and smb had gains of over 2% for the day. thanks in part to the terms bounce, all industries finished in the green for the week. due to concerns about too much supply and we can demand and for the first time in a month likely - went down more than 20% from a higher 76 back in october the
third. according to the wall street journal amazon plans to split it second headquarters between two locations rather than picking just one city. under the new plan, amazon will reportedly have 25,000 employees in each location and reports claim the decision to split the locations is due to the recruiting of the best tech talent as well as potential housing and transportation issues. new york city and crystal city in northern virginia are among the cities being considered. disney reported record in all profits this week. disney revenue up 12% from $14.31 billion with fourth-quarter earnings beating expeditions with price hikes at the theme park as well as blockbuster films like the incredible to and antman and the wasp help boost those results. disney announcing is launching a new stream service to compete with netflix late next year. disney plus will consist of disney studio content as well as
marvel, "star wars", pixar franchises but no word yet on what disney will charge for the service. maria, back to you. maria: thank you so much but washington dc was only the focus is weak. investors pricing for possible change on capitol hill with midterm elections changes. assumed blue wave it certainly was not but it was more of a ripple. democrats in control of the house and rub against strengthened their hold in the senate with both results expected. what will the undivided congress made and for your money? president trump for recognition director and founder of average capital, anthony scaramucci joined me now. anthony, great to see a. >> great to be here, maria. you do an amazing job on the show. way better than me, i might add. a little disappointing for me but i do love you. maria: and i love you. >> love the set and the holding. maria: the book, blue-collar president, can graduations on the book.
let me get your take on what has happened this past week. we know it was the fact that the dems at the house they do take the majority but the senate, i feel, is the place where things are ratified and he can control. >> the trump train, there's a little bit of everything in this electoral situation, the trump train is steady as she goes with all the progress because the senate is going to ratify trade deals, ratify treaties, also is likely you have one, possibly two more supreme court nominations in the back half of the president's term. although things are favorable for him. negative, obviously, they now have subpoena power and investigatory power in house. if they start to do that you and i both know he could potentially come to the trade deals by slowing them down and enforcing new structures into the trade deal and things like that. in general president story is much intact.
by the way, without his help the report begins with a bend in a way worse shape. his 26 campaign stops over 14 days made a very big difference. maria: you are right. he was out working hard. he is working hard for senate seats because he knew how important strengthening his hold of the senate would be. >> don't drink, don't smoke, you can fly on air force one at age 72 and do 500 meetings. maria: is amazing. there's an article on friday in the journal and let me review what a separate securing congressional passage of the makeover of the nafta agreement us mca, that will get a lot harder with a split congress. democratic led house give mr. trump political opponents power to demand concessions and a change for allocation of a new agreement reached in september. markets rallied on the us mca and it have to be agreed upon by congress and will markets trade down on the expedition that this congress could slow down the
president's agenda? >> they certainly could but i think the point i tried to make my book is that the democrats will be way better served to focus on the blue-collar people, lower middle-class people. that trade deal does that. maria: that's why the union's like it. >> example. democrats made a big mistake if they go in the direction because then they look at being a protectionist for no reason. one of the points i make my book is the democrats are making a big mistake by calling the president space things like deplorable or ethnocentric or racist or they would be way better served to recognize he effectively hijacked their base in 2016, moved it to his side of the ledger and they would be way better off focusing on them and hopefully they will do that in congress because one thing we both know about the president he will cut a deal with them. maria: us at talk about our mystical and biotech. the present is often shy about saying drug prices need to come
down. now you have a democratic congress in charge in the majority and house elijah cummings and nadler and judiciary committee they will want these pharmaceutical companies to come in and start talking about how they arrive at a price. i'm wondering if pharmaceuticals is one area that is under pressure as a result of the divided congress. trying to look for specifics. >> i think so. i also think this is one of the mistakes that are made by the middle number, /-slash never trump in the publican party. he's been jamming the idea of negotiating directly with the pharmaceutical companies on their prices for medicare. there's been a little equivocation on the inside related to that. here's another example where the president can split the seam and get in there with the democrats and work on what drug prices. maria: anthony, great to see y
you. trump, blue-collar president. >> please, go out and buy the book. please. how is that? like a jeb bush way to separate please, clap and buy the book. maria: anthony scaramucci, thank you for joining us. stephanie pomeroy back up next. right after the sprint will foxbusiness special presentati presentation. women in money caused by deidra bolton. i'm excited about the program. check out the preview. >> i wanted to create something that was authentic and owned by, not just women, but senior people at the firm where we would hire great talent, not because they were women, and we would promulgate talent. >> that is so important. that's the double edge sword people think about in any quota meeting, category, where you want the best people but you want a diverse group of people want a diverse group of people this is actually under your budget. it's great. mm-hmm. yeah, and when you move in, geico could help you save on renters' insurance! man 1: (behind wall) yep, geico helped me
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maria: welcome back. federal reserve meeting and as expected it did not raise interest rate. it signaled that we should expect a fourth rate hike of the year and month at the december meeting. that committee saying he wants to raise rates three times next year. joining us is a special panel on the potential effects of the fed policy in the economy and market. stephanie is in the comments and president of macro maintenance and did grandma founder of the grants interest rate observer and it's great to have a vote on the program could thank you for joining us. interest rates is dictating markets. honestly it has for a long time but jim, you think something is fundamentally shifted. were moving into a new era with regard to interest rates. >> i'm less dogmatic than i might've been years ago when i knew about the future but seems to me bond yields probably, not surly, bottom in 2016 and i was when the ten year treasury
fetched all of one in 38% and since then has more than doubled. but i think more important than speculation is the observed fact that we have been living in a world of interest rates. we have worldwide and we have had ten years experience with things we never experienced before. for example, their present funding cost for example and even today we had upwards of 7 trillion of debt yielding less than nothing. not much when you think about it. so, way back when the great victorian financial editor pronounced alluding to the national [inaudible] it can stand many things but cannot stand 2%. he meant that 2% was an
incitement to doing things one ought not to do with money. we have had ten years, not of wealth, i think positive to present. 10 years of negative, almost very low interest rates, great incitement to do what one ought not to do with money. reach for you, speculate and take risks. maria: and when you have ten years of their race or negative rates, stephanie, your behavior changes in the way you invest in the way you buy in the way you borrow. it all changes. that is to do now. >> that was the intention of the fed's quantitative using program. it was to punish those seeking safety and reward being brave but reckless risk. using that vividly borne out in the corporate bond market where we met with corporate market in general where we now seen record levering up by corporations and they even, as the fed tightened,
starting in december 2015, enjoyed lower and lower borrowing cost because the appetite for risk was so rapid that people continued to defy the fed's effort to raise rates and drove corporate borrowing costs lower. however, i think that it started to change and i agree with jim that were starting to see some signs of a ship there and the piper will be paid next year when 780 billion dollars of corporate debt roles at higher interest rates. we will find out if homeowners in 24, 2006 can handle any modest increase in interest rates from low levels but the modest increase may kickoff a lot of marginal borrowers. 2019 will be interesting in that regard. maria: i want to get your take for the equity markets but jim, we can look at the corporate debt market and national debt.
federal debt because let's go through this chart you brought us. it's about the fact the rainout were taking a look at $2,120 in debt it took us - it took us a long time to get to $1 trillion in debt. >> took us 193 years to go from alexander hamilton to the first trade with ronald reagan and 1986 came the second trillion in 1995 or thereabouts my 5 trillion and we achieved 10 trillion, is achieved the word? [laughter] in 2008. now, 21 trillion and this year, of great founding press ready, will post a budget deficit in excess of $1 trillion. if you look at the supply of government securities, taking account the expanded treasury, expected that dispositions it is
said so elegantly, tightening. that some of bonds will be the greatest as a percentage of gdp since 1945. further to stephanie's point about the rollover drama of next year with the government itself will be very interested force in the bond market and perhaps the bond market will handle - it will decide the treasury is a thing to have. if it does not think that, i think we're in for an interesting times. maria: let me ask you what this means work market. if a great angle in terms of what is this mean for some of the unicorns out there in terms of the borrowing. i want to get take, stephanie, what this means in
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♪ maria: we are back with stephanie and jim. we're talking about the impact of debt and the impact of higher interest rates on market. tell us what you see happening to market in 2019. what year are you respecting given where the fed is and what you see happening with rates? >> 2018 was the year of the impact of fiscal policy. fiscal stimulus and the tax cuts where the story. it drove profit growth and economic activity. 2019 will be the year where our focus is on monetary restraint. it will be the opposite. we will see not only the fed continuing its quantitative typing program but global central banks will also complete their quantitative using cycles
that they are no longer be adding liquidity globally. monetary restraint will be a driving force behind the markets. i think again corporate bond market will be the flashpoint for this. dislocations there will have conferences for equities as they always do. maria: if i could get 3% just as a naïve and simple think i can get the present in the two-year and probably going to be money out of equities. several weeks on october, and allocation shipped? >> yeah, especially you do that if you felt that we had seen the peak in economic activity and earnings growth and corporate profit margin at record levels. these are figures that are just unsustainable in normal times but when the fed is ratcheting rates up on an economy that is toting record leverage they seem particularly vulnerable so smb
earnings estimate which is calling for half the rate of growth we had this year but is still robust, 11% sort of number that estimate will be nudged down steadily over the next few months and i will drive stock prices with it. maria: i love your recent peace, jim, what corrections correct. we saw a correction in october and it was correcting what was going on in terms of the zero interest rates. you are pointing out another indication of these zero rates and that is what happens in terms of lending with private equity investments with uber left doctor. >> uber is nice here and it's announced its intent to be the amazon of tradition. it has raised 14 billion and i'm going for memory but common equity and preferred markets and it has lost half of that in
operating deficits. it's a major loser with operationally and it's raised about the money in the corporate debt markets. uber has been sustained over the past years with meteor arc revenue growth in passenger has a sustained by accommodating venture capital and debt markets. and low interest rates. the rates have set the tone for the very, very easy terms on which capital is allocated. maria: $120 billion evaluation. >> yes, those are the investment bankers. [laughter] they will not get it and they ought not to get it because uber achieves no economies of scale. maria: where you hide during the market disruption? you have that anytime you think the markets will get impacted by this, equity markets, we did see that in october and are we done? [laughter] or we see another big selloff? you exciting evaluations to come down? >> they say never forecast
direction in time. i have been surprised it has taken this much time for evaluations to return to some sense of normalcy but again i think the fading of the tax-cut affect next year and the emergence of monetary restraint at front and center will drive equity prices substantially lower. maria: substantially meaning 30%, 40%, what? >> i don't - [inaudible] [inaudible conversations] >> in the fullness of time,. [laughter] maria: great to see you both. great conversation. stephanie and jim, thank you. don't go anywhere. more wall street after this.
maria: welcome back. special program next week. robert kaplan, my special guest. waiting to hear what he has to say about economic growth in the next two years. see you on sunday morning on the parties tell this be every attorney will hear from the outgoing house majority leader, kevin mccarthy, my special desperate this will be his first comments about what the new congress, democrats take to the majority his first comments post midterm elections this weekend but catch the show at 10:00 a.m. i on sunday morning. plus, start smart everyday on weekdays here on foxbusiness. tune in weekdays on foxbusiness
from six-9:00 a.m. eastern with mornings with maria. i hope you join me every week special programming over it now with this program and amazing new foxbusiness special, women in money, with deidra bolton. stay with us are here. those with it the weekend. thank you for eternity. the great west of the weekend, i will see you next time. >> welcome to women and money. 40% of american women are the breadwinners for the family with more power and more responsibly than ever before. there's a lot to navigate from dealing with practical money and investing issues to how to handle tricky career situations. i'm deirdre bolton and i have not amazing and in special gas where the top of their field. they will share what they learned and put on their mental health and answer top is this related business questions. the show is for all ages, stages for people in all industries. first guest, blackstone's
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