tv Maria Bartiromos Wall Street FOX Business February 2, 2019 3:00am-3:31am EST
i'm jamie colby. thanks so much for watching "strange inheritance." and remember -- you can't take it with you. live here at 8 p.m. eastern. ♪ ♪ >> 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. coming up in just a few moments, self-made billionaire and patron spirits cofounder john paul dejoria is my special guest, and many of my exclusive interview with treasury secretary steven mnuchin coming up. but first, january's job report was released friday morning, and despite a government shutdown which consumed much of the month, the number was much better than expected, not a major impact at all from the government shutdown. 304,000 jobs were added to the
economy in the month of january. the unemployment rate did tick up to 4%. macro mavens president stephanie pomeroy joins me, and always a pleasure to see you. >> thank you for having me. maria: you've had some concerns with this economic expansion. first, i want the get your reaction to this jobs number. what does it tell us? >> i think it tells us how strong the economy was in 2018, and i think that tailing off, obviously, these are january numbers, january's very noisy in general from a seasonal standpoint, on top of the government shutdown it's just hard really for a trend. but broadly, you know, the long-term drivers of employment growth have peaked and are tailing lore, the number one input being profit growth. as we go into 2019, the forecast is from 24% growth last year to around 6%, i think is the current estimate -- maria: in terms of profit. >> in terms of profit growth.
and, obviously, profit growth is a key input into the decision of ceos as to whether to hire and expand. maria: yeah. >> so as that profit growth slows, employment growth generally follows. the second factor that's kind of conspiring to depress employment activity going forward is the tightening of credit spreads, you know, the corporate bond market started to tighten up in the fourth quarter of last year. and while it's rallied back alongside the stock market, you know, since december 24th, spreads are still well above where they were a year ago. so borrowing costs are going up. that's another constraint on the capacity to expand hiring and pay more wages. so those two forces, profit and the tightening of credit conditions, i think, will depress employment growth going forward. maria: bridgewater associate, one of the smartest guys around, ray first told me months ago that he was not expected the federal reserve was going to be
able to raise interest rates in 2019. he also was the fist person -- first person to tell me he thought they would look at the balance sheet unwind and change that. the fed chair said it this week, we're on hold for rate hikes, and we may very well be on hold for the balance sheet unwind. where does that stand, and what do you think about the fed pivot that we just learned about over the last month? >> well, i think the surprise is that it took this long. in that i totally agree with ray, and,, in fact, i'm sort of famous for this chart of the long-term interest rates and just highlighting where each financial and economic crisis has occurred. and since the peak in interest rates in the mid '80s, you have had financial crises at lower and lower levels of interest rates. it doesn't take much of an increase in rates to precipitate some crisis in the financial markets or a slowdown in the economy. and the reason why is that we've expanded our borrowing so much. we're so highly levered as an
economy that just a modest increase in rates, you know, taking the fed funds rate to 2.5 was sufficient to really start to impact the economy and the markets. so, i mean, i thought as the fed was tightening that this was going to be a headwind when they started implementing quantitative tightening, i really got concerned. you and i talked a lot about, you know, my fears about the impact of the balance sheet -- maria: yeah, they were on autopilot there, and that's why the markets were so troubled in december because this whole idea they were going to sell $50 billion in securities every month without recognizing that europe is a mess, brexit uncertainty, france urn -- uncertainty, italy budget problems, china slowing, we don't live in a vacuum. >> and how can you argue that putting all that stimulus, the quantitative easing, into the system helped boost the economy and financial assets but taking it away won't have an impact? maria: right.
>> it was foolish to assume that autopilot was sustainable -- maria: but i've got to push back because we're just coming off the best january in 30 years. the dow industrials, the best performance in january since 1989. the best performance in january for the s&p since 1987. markets did really well in january after a tough december -- >> right. martha: and we just got -- maria: and we just got this weekend the very strong jobs numbers, 304,000 jobs. you're poking holes in a story that, the actually, seems pretty good. >> well, i guess i would emphasize the caveat that you made which was the january bounce comes after a really bad forty quarter -- fourth quart. maria: true. >> over the stretch of 2018, you basically gave back all the gains that we had seen. and i would further underscore in 2018 the whole story was the tact cuts and the impact on profits. maria: yeah. isn't there a runway for that? there is a little bit of a runway for -- and the deregulations. >> in terms of the absolute
effect, totally. but the problem is the markets don't care about the absolute effect, they care about the change. what have you done for me lately. maria: yeah. >> is it better than it was -- maria: do you want to sell stocks in this environment? >> i do. maria: you have been looking for a big decline. >> i think the market expectations are still ahead of the reality. i think that for now any the fed is still doing 50 billion a month in, you know, tightening its balance sheet. maria: right. >> that continues to be a drain, and we are seeing the impact, as you referenced, on the credit markets where, again, high-yield issuance is really hard to come by. that's critical because companies are so levered right now. they need that access to capital. maria: stephanie, good to have you on the program. >> thank you so much. maria: stephanie pomboy, more "wall street" right after this. ♪ ♪
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>> these are growth killers. these are job killers. these are incentive killers. this is a return to some heavy government planning, centrally-directed economy. maria: joining me now to talk more about that is self-made billionaire john paul dejoria, and it is great to see you, j.p.. thanks so much for joining us this weekend. >> you're welcome. maria: so, i mean, i've watched your career, and i've looked at it over and over again in awe because you are self-made. you started from nothing and built up a phenomenal career and a phenomenal portfolio of assets. what is your reaction to when you hear a proposal like elizabeth warren's which basically is saying if you have more than $50 million in assets, we're going to confiscate some of it, we're going to put 2% on it, and if you're a billionaire like you are, it's 3%. your reaction. [laughter] >> hello, old soviet union.
and any other socialistic country that went too far overboard. these people are misinformed but don't understand the glory of paying a little bit of tax and, of course, when it is too much. at 14 years old i got a social security card. i had to, i worked for stewart's cleaners. and out of my checks there'd be a little bit going to federal tax. at that point my residence was in california. i was like, mom, i'm a taxpayer now, look, i'm helping our country out. it was a little bit of tax. i think people in that tax bracket now don't pay any taxes, for example. so i was proud to. now on the other end, when people want to raise the tax to, you know, 50, 60, 70, 80, 90%, they are so misinformed because i don't think they want to kill intentionally the american dream. they don't realize that that's what happens. maria: yeah. >> if you look at history, when tax rates go down, the economy
and everybody goes up. maria: yeah. >> that's how it works. maria: by the way, that's what we saw -- go ahead, when you were overtaxed, sorry. >> when you overtax, we've shown in the last several years france went up to 70%, their economy fell apart. they got rid of their president, put another one in, it didn't work. people left the country. the wealth left the country. when you don't have something to go after, everyone has that american dream. you can own your own house, and maybe one day if we are lucky -- and some of us are -- we can become millionaires and more. we do a lott to give back. when you start telling people if you accumulate a lot, it's not a good thing, we're going to take it away, we're going to take it away, it takes away that dream. it takes away that enthusiasm to go for something bigger. maria: what are your thoughts on howard schultz? it's interesting, he's trying to find this middle ground because he seems to lean right on taxes and small government but leans left on other things like, you know, he was a democrat before
he said he was an dependent, but what are your thoughts on howard schultz entering the race? >> i think when somebody enters a race, someone with that kind of a background, that kind of power in management, it's good. i think it's wonderful because it shows people that are top earners, people that really did their life and partper amerin of their time and help our government. right now the man is feeling his way around, but apparently he feels he could probably do something different. he doesn't need the job, but he feels he could do something different. so anyone that feels they could do something different that wants to participate in our order of government, i think is wonderful. now, his stand and things he stands for may change along the next year as he's learning about politics. maria: yeah. >> but i think it's good to get involved in that level as a business person. maria: helenes on immigration and climate change, but he's a billionaire, and the democrats do not like that. so there's been a lot of hoopla
over this last week that e he's going to take votes from donald trump. the democrats say don't enter the race unless you enter as a democrat. he says the democratic party has gone way to the left. what are your thoughts on the fact that billionaire has become a bad word in the face of democrats? >> it blows me away. this is not democrats, it's other people out there. blows me away. maybe it's because they weren't able to achieve the -- it's past the american dream. they had to do something illegal to do that. maybe they stole from somebody. they don't know. a lot of things on television don't show. the good billionaires, i did a documentary last year called good fortune that shows you how to become very wealthy, help a lot of people, the animals of the planet, the environment. it's how people look at something. and when tv portrays them as
people who are getting more and more and more for doing rez, it's stupid. it takes away the ability of the human being. maria: yeah. >> so things will change along the way, hopefully, for all politicians. and those that want the higher taxes will probably be more informed and say it's going to ruin america. are you in politics to kill the american -- maria: mayor de blasio said there's a lot of wealth in the city, but it's in the wrong hands, and you have to wonder what he's talking about. is it a guy like ken land gone who just gave $100 million to nyu medical school so they could give out free educations? or a guy like bill gates who's been, you know, his entire life has been giving money away. i mean, the list goes on and on. you wonder if higher taxes changes that behavior of the philanthropy that has been so strong in america. >> two weeks ago -- maria: yeah. >> i just wrote a check to the federal government for $775 million. i sold patron, of course, last year. and that's with all deductions,
and the tens of millions i ghei away to -- i gave away to philanthropic endeavors, so we are paying a whole bunch of money. maria: great insights. always a pleasure to talk with you. >> my pleasure. america's still working. you still work out there too. peace, love and happiness. maria: exactly. peace. thank you, john paul. don't go anywhere, my sit-down with treasury secretary steven mnuchin is next. ♪ ♪ >> the president has made it clear china must make a deal or more tariffs will hit. so what are the odds of an agreement? the treasury secretary's surprising answer when "wall street" returns.
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leaders joining a high ranking chinese delegation this week in an effort to move trade talks along. u.s. treasury secretary steven mnuchin told me a deal could get done by the march 1st deadline. >> you know, they're moving in the right direction. we want to speed that up. but the issue is really we want to make sure that u.s. companies can compete fairly in china. and if we can do that, china has a very large, growing middle class. it's an enormous market. as i've said before, this is one of the biggest opportunities for u.s. companies and u.s. business if we can get this right. and president trump is determined. this is the first administration that has aggressively said to china, you need to play fair. maria: is the president willing to drop all a tariffs should you get a good deal that's acceptable? >> i think everything's on the table. so the president will look at, again, the objective is to look at a very fair deal. hopefully, we'll make progress this week. the president will be involved in these negotiations and
discussions. and we've still got a lot of work to do. maria: the president said, look, i'm a tariff guy, i like tariffs. does that mean these tariffs are for, you know, no end in sight, or would he be willing to drop the tariffs altogether? >> there have been no recommendations from the economic team on that yet. the first step is to make sure we get a good agreement, and when we get a good agreement, we'll make a recommend to the -- a recommendation to the president, and he'll consider that. maria: you're still talking about 6.4% growth, we think, but that is lower than some people think. what's your worry or how concerning is it that the chinese slowdown will impact the united states? >> well, there's no question that china is slowing down. they still have significant growth rates. we're beginning to see the impact on world growth. r objeives not to slow down china. our objective is to make sure that u.s. companies can do business i chinaness fairly, soe
monitoring these issues. maria: the cbo says that the shutdown cost $11 billion to the economy, $3 billion of which is completely lost because of the 35-day shutdown. your reaction. >> maria, kevin has set at the cea is working on final numbers for us. i think his view is that no question that there was some cost, but those costs will be recovered as money comes back into the system. i think it's -- he views that it will almost all be recovered. as relates to the exact number, i haven't seen the final numbers, but the good news is we got the government open, people are back to work, and we have not seen any significant impact on the economy. maria: has the -- is the president prepared to shut down the government again in three weeks if he doesn't get the money for the border wall? >> maria, i had dinner last night with the president, the vice president, senator lindsey graham, we had a very good discussion on this issue. there's no question in my mind that the president and the vice president want to do a fair
deal. lindsay has been terrific in helping to negotiate this. i hope the democrats are sincere. if they are, there's a sincere deal that will include a lot of different issues that need to be resolved. but if there's -- if they're not sincere, the president has all his options on the table, and he's determined that he's going to make sure we have border security. maria: what is the impact on the irs? there's a lot of worry that people are not going to get their checks after april 15th as a result of this shutdown. what can we expect? >> well, let me just comment on both the treasury, our bureaus, the irs in particular. i want to thank the enormous number of government employees who came in and worked during the shutdown. i think, as you know, we had the ability to bring in critical employees. we never would have been able to do the sanctions that we've been doing over the last month without the hard working people. and the irs had a large number of critical employees to make sure that we were ready to open
for business as usual. so we're ready to open for tax season, we're taking tax returns, we'll be ready for tax refunds. we'll have the phones restaffed. now, let me just say there's no question this time of the year there's very, very heavy call volume. that's something we have to manage. i encourage taxpayers who have questions to try to go to the web first. but we are ready for tax season, and i can assure you that tax refunds will be paid as normal. maria: okay. so tax refunds will be paid as normal. that's the bottom line. >> absolutely. maria: let me move on to the sanctions and, in particular, venezuela. you've applied on the venezuelan oil industry. tell us specifically what the impact is here. >> well, sanctions are a very important tool in our national security portfolio. and when we look at national security issues, we look at economic tools, we look at diplomacy, we look at national security tools, military options. so there is no question that what we're trying to do is to
cut off the money to the regime that should not be in power and make sure that president has access to the assets of the country and make sure we protect the assets for the people of venezuela. maria: our thanks to secretary steven mnuchin. don't go anywhere, more "wall street" right after this. ♪ ♪ ♪it's been a long time coming, coming
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♪so where did we all go wrong?♪ ♪woo ♪where did we all, where did we all go wrong?♪ ♪love, love, love, love ♪love, love, love ♪(love is our only hope) ♪love, love, love ♪where did we all? maria: welcome back. coming up next weekend on the program, federal reserve bank of dallas president and ceo robert kaplan, my special guest. he was the first one to tell me there was a slowdown coming. this weekend join me on fox news on "sunday morning futures," i have an exclusive interview with congressman kim jordan and the author of the book "a.i.
superpowers." that's 10 a.m. live on sunday morning over on fox news channel. i hope you have a great rest of the weekend, everybody. that'll do it for us. thanks so much for watching, i'll see you again next time. ♪ ♪ ♪ ♪ >> hello, and welcome to the "wall street journal" at large. this week the trump administration moved to ratchet up the pressure on venezuela's regime. on monday steven mnuchin, the treasury secretary, and john bolton, president trump's national security adviser, announced new sanctions against nicolas maduro and what's left of his government. the administration, along with many latin american government, the e.u. and canada, has already withdrawn its official recognition of ma maduro's