lou: thank you for being with us. america first. it sounds first, it feels good. that's it for us tonight. thank you for being with us. judge andrew napolitano, on monday. francis rooney among have a great weekend. good night from new york. from the fox studios in new york city, this is maria bartiromo wall street. maria: welcome to the program that analyzes the week that was. thanks for joining us. coming up in just a moment, asset management's joel green blat, our exclusive guest this week. first let's get with jeri. she's standing by with the headlines impacting everything from wall street to main street. >> thanks. the red returned to wall street this week. the first hit came on wednesday when the new federal reserve chrman testifi before the house for the firstime and hints that the fed m need to

raise the rates more than the three times folks expect this year. stocks finishing down 400 after being up triple digits in the session. his comments made the ten-year yield jump but then the market event of the week happened. >> it will be 25% for steel, it will be 10% for aluminum. it will be for a long period of time. >> president trump announcing big tariffs on coming on steel and aluminum. investors did not like that at all. stocks tumbling immediately on the comments with the dow losing 400 points on the day. and then the tariff-related losses continued on friday. dow and s and sprks seeing 2018 gains wiped 0 out as a result. when everything was said and done, markets finishing the week well into the red. this week saw the last trading day for february. all three indexes finishing lower for the week. the dow and s&p snapping a

ten-month winning streak with their worst month. elsewhere in business news, retailers walmart, dick's sporting goods, kroger and l.l. bean announcing they're raise the minimum age to purchase guns at their locations to 2 is years of age. the move coming two weeks after the horrific stoneman douglas shooting perpetrated by a troubled 19-year-old. maria, back to you. maria: thank you. in a market that is up nearly 40% since election day, it can be tough for investors to find value. our next guest has made a career out of discovering hidden value in the stock market, being do you knowed the value guru. you may know of his books that were big hits with individual investors including "you can be a stock market genius" and "the little book that beat the market." over the years, it's outpaced the s&p 500 by 6% upt's up more than 5% year to date with more

than $5 billion in assets under management. gotham asset management managing principle joel greenblat joins me now from the forbes adviser's conference in vegas. thanks for joining us. >> my pleasure. maria: let's start off with where you see things here. characterize the backdrop for investing. obviously the macro story has been good and how you view this market at current level. >> sure. well, you know, the stock market is just a bunch of stocks added up together and that's the way we look ait it. stocks are ownership shares of businesses. we actually go around and value each individual business. if you think about the s&p 500, 500 stocks are weighed a certain way and we value them daily and we've done that for 27 years individually and then we add them up and raik them the way the market does. and right now we're in the 16th percentile divorce expensive over the last 27

years. the marker has been cheaper 84% of the time, more expensive 16% of the time. then we look at what's happened and what's happened is from this valuation level in the past, returns on average of 3 to 5%. so below normal because the markets average about 10% a year for those 27 years and this is 3% to 5% and that makes sense because the market is more expensive than it's traditionally been but importantly not negative expensive returns. now we can't tell you what's going to happen in the next year. and the way we get back to the 10% expected returns could be in a few ways. one the market could fall 18% tomorrow, the other is it doesn't have to do that, it could yurn earn 3% to 5% in the next three years and three years we'll be back to 9% or 10% expected returns. it gives you a perspective of where we stand. maria: with all of that perspective, where are you finding value in this market right now?

>> well, i just told you about the s&p 500 in the 16th percentile. russell 2,000, the small caps, that's in the 2nd percentile, it's cheaper 98% of the time over the last 27 years. so as you would expect, we're finding more value in the large caps and the small cap index is expensive. we don't short that index. we short the most expensive stocks in that expensive index sohe opportunity is in small caps. maria: so small caps have created opportunity but they're expensive. so you want to be shorting small caps? >> that's what we do. the opportunity on the long side is the small caps and on the short side it's mostly in the small caps although there are plenty of high priced -- market is expensive in large caps. in the expensive market we short the most expensive stocks. there are opportunities there too.

maria: there was a lot of discussion around the tax plan. these maller companies are getting a huge benefit having to see a tax rate, a corporate rate go from almost 40% to 21%. but it's the large caps today that you say you're fieping opportunity. tell me how the dollar fits into that, joel. as the dollar traded up, that's a negative for these international companies but of course we've seen such volatility and most recently the dow is down do you think that continues? >> really we don't think about the world that way. we're looking more long term. you know, we're looking for earnings over years. and the dollar is not too far out of line with other currencies, if you look at a long term perspective. what it's going to do in the short term, there aren't many people good at predicting that. we're looking at earnings over the next five to ten years. and what happens in the short term is not going to affect us. maria: okay. >> some of the large cap

companies have a lot of international business, some don't. maria: yeah, i think you're actually right. and a lot of people recently have been talking about the emerging marketing creating an opportunity. europe finally we're seeing growth numbers out of europe. the large caps you're investing in are benefiting from the recovery we're seeing across the world, correct? >> sure. you know, we -- that's true because a big chunk of their business is international. but we are very u.s. sen trick in what we do, especially in the long short portfolios where we don't have the balance currencies and trading costs. we focus mostly on the u.s. and of course u.s. companies do benefit from international business, as you know. maria: so do you think that this market has gotten ahead of itself? i mean are you expecting the volatility to continue and importantly the decline? >> well, you know, we've had actually a very smooth until

most recently, a very smooth period of time, which is not normal. so obviously i think the volatility will pick up from what's happened over the last couple of years and i think that's good news for stock pickers. there is funts in discernment rather than steady flow up. for value investors like us, that's good news. maria: when you find value is it a specific sector or are you looking at specific situation, stock situations. can you share with us where the value is? >> sure. well, u know, i can name a few longs that we like. apple, as you know the biggest company. but we still love it. some people think it's has hardware company that's going to crash and burn like all of them do. other say no it's a network, an ecosystem, products play off one another. the interest is probably gray between those two but it's cheaper than the market. it's a very good business. they have a great niche.

so we still love apple and we own a bucket of apple. these are things that gush cash and high returns on capital. we owner boeing, which is a due oply. there's only one competitor selling cheaper than the market. growing faster than the market with a better market fashion. we're low on google which is trading well below the market and obviously great market. so you know, with some o some og neems, believe it or not, are relatively good values. maria: it's interesting to hear a value manager talk about technology. for the longest time we thought about these tech companies about the growth stories not the value stories. but you look at apple and what it's trading at right now, it's got to represent value because it's trading below the market. >> besides the fact that even warren buffet likes it, what's good about it is that it's really got a pretty sticky business. it's got a brand name that

people love. coca-cola has been in business for a long time and it's just sugar water but people like the brand. apple has that going for it. but it's an ecosystem of products that work together. so it's far better than the average business. it gets much better returns. it's got a loyal fan base and so if you can buy that cheaper than the market, that's on a relative basis a good deal. and so we like it. boeing, as i said, is a due oply. that's very hard to create that. and big barriers to entry. so also a great business and everyone knows about google. even though it's cheaper than the market, it's much much better than the average business and much stickier business. these are great relative bargains and should get us reasonably nice returns better than the market. more of maria's exclusive interview when wall street returns. >> these rnlt scams or bad you tell your insurance company

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maria: talk about the backdrop here and whether or not you're expecting the economic story to improve from here. you know, when lawmakers came out with the tax cut plan, we were talking about the po potential for 4% economic growth in 2018. is that something you see? what will be the impact of the tax plan? most people don't think this is going to be year tomorrow but it's going to have a long runway. >> well, that's a great question. i think the tax plan is a net positive. and as you mentioned in the beginning, particularly for smaller companies. larger companies we're playing a game where the posted tax rate really wasn't what they were paying. and now we can get more direct and clear view of their earnings. but they weren't paying that much more than the current tax

rate. for some of the large international companies, it's not going to be a big boost. but for a lot of the small companies, i think it will be very very helpful and you know, they create a lot of jobs. maria: what about the rollback in regulations. i want to get your sense about the policies coming out of washington. the rollback and regulations is at the beginning. we understand that the president is going to look at dodds frank, the financial legislation and perhaps roll things back there, maybe roll back the vol rule. is thank gob t that going to be? >> i actually think it will we got overregulated, less regulation will help. there are a lot of things that shouldn't have been done that usually overregulation doesn't help them. it just adds extra burden. you know, a lot of the things -- a lot of things that go wrong, let's say the enrons of the world, these are people willing to do criminal things that were illegal before hand. throwing out a lot of extra

regulations isn't going to help. also extra regulation has really killed the small banks. if you're talking dodd-frank. and you know, so it's tough to get loans if you're a small business. and if it gets eased up and they can compete a little better, that will help the economy as well. i think we overregulated. i think regulation is important but less than where we were would be a big benefit to the economy. >> let me ask you about the short side of the portfolio and the smaller names. how significant a selloff might we see in some o these names given the fact this is a group that really benefited from new policies earlier than others? >> yeah. even if you add in the benefit, they're still very expensive on average. you know, i'm not good at predicting short term market moves. but once again stocks are ownership shares of businesses. they're not pieces of paper that bounce around. they're expensive. there will be a time when people

are a little more negative and there will be better buying opportunities there. and i don't like to mention individual small cap shorts. we are short some large caps, you know, sales force is trading at 65 times earnings. it's a good business. but they've been growing their sales but not their earnings for quite a long time. that's not a really good sign. and you know, there's blizzard which is a game manufacturer, world of war craft, call of duty, hot games but they're not hot forever and they need more hits but yet it's trading 40 times pretax. so there's opportunities there. they're expensive, not -- these aren't scams. these aren't bad things. they're just very very expensive. and so i think after a period of prolonged markets tripled over the last eight years or so, people start throwing caution to the wind and paying a lot of money for the small caps, paying a lot of money for the large caps.

the opportunity will come, i can't predict from where but it's more dangerous. when we return, more of maria's exclusive interview with joel greenblatt. >> amazon is run by a special guy and tough to bet against an nick was born to move. not necessarily after 3 toddlers with boundless energy. but lower back pain won't stop him from keeping up. because at a dr. scholl's kiosk he got a recommendation for our best custom fit orthotic to relieve his foot, knee, or lower back pain, from being on his feet. by reducing shock and stress on his body with every step.

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welcome back to maria bartiromo's wall street and now the conclusion of maria's exclusive interview with joel greegreenblatt. maria: what's your take on am don right now. a lot of team name amazon at the expensive one. is that trading at 100 times cash flow or 90 times cash flow? >> yeah, amazon is historically very expensive. and there are you know i call it the tea tyranny of the antidote.

there are companies that trade at 80 times pretax earnings that are worthwhile. but if you look back over 20, 30, 40, 50 years, the worst strategy is to buy from companies that are losing money. you can pick out the diamonds in the rough and amazon, my bet, would be one of those. everyone knows that name. but it gets people speculating in other names that aren't quite as good of a business and throwing caution to the wind there and i think that's where you get hurt. amazon is run by a pretty special guy, tough to bet against him and tough to come up with a valuation. so some businesses you're putting in the too hard pile, you're not exactly sure what kind of a premium they're worth. but amazon is a unicorn that i don't want to speculate on. maria: yeah. you know what? you make a lot of important points, particularly on the leadership point. you've got to know and understand who is running the business. and really, you trust things that way sometimes more so than when you look at a valuation

situation. let me ask you about the bond market, joel, and this worry over 3% on the ten-year. is that justified? >> you know, we're -- you know i don't predict interest rates. but what i will tell you is the way we look at it is bonds are competition for stocks. and until, you know -- there would be corrections as the interest rates move up. but you know we assume when i gave you the valuations if are the market before, we normalize our interest rates over time. so we're still well below normal. there's room for the long term bond rate to go up without being the thing that totally impacts stocks. but of course over the long term if they were to move up two points from here, obviously that will impact stocks, tougher for them to compete, people will be willing to pay a little less. and i think that's fair. i don't know where they're going to go. over time we normalized and if you want to assume that rates

are below normal, which which we do, i gave you valuations that account for that. it's expensive but still expecting positive returns. no reason to run around screaming, you know, market -- it doesn't necessarily have to fall pe sip u us. maria: when you look at where we are, come on. you're coming off of a rock bottom rate. we're at 2.9% from zero and negative in some areas of the world. but 2.9% is just still 2.9%. in terms of running around nervous, that's what's happening, though, right? you see thousand-point moves, 300-point moves up and down. ill feels like volatility is back. >> yeah. but i think that's a good thing. you know, when we had -- over the last few years, that's the abnormal part. that's before this latest volatility. stocks should be volatile. they have different

fundamentals. when they move lock step together and there's limited volatility, that's not actually normal. stocks have individual outlooks. they should act individual, not as a group to what's happening in the overall economy. and i think when you start seeing discernment and more volatility, that's good news for stock pickers. that's good news for rationality. that almost keeps us out of trouble long term. doesn't put it in trouble. the market slowly floats up and everything goes together, that's not normal or good. and so this volatility i think is very healthy. maria: joel greenblatt. thanks so today, big thinking in the finger lakes is pushing the new new york forward. we're the number one dairy and apple producers in the eastern united states supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. all across new york state, we're building the new new york.

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maria: welcome back now a look at some of the big market events coming up in the week ahead that may impact your wallet. let's look at the economic data on top. we get typical market movers like international trade, the beige book report, consumer credit and wholesale trade. a lot of crucial data on the

jobs market coming up in the week ahead. wednesday of course we get the usual sdp employment report, leading up to friday when the labor department will release its february employment numbers. the focus there, of course, will be on wages. on the heels of tin crease of 2.9% wage growth in the last month. earnings season of course is winding down but we get some results from target, h and r block, urban outfitters, dollars tree, costco, american eagle outfitters. all out with fourth quarter ir earnings in the week ahead. next week joining me, i will speak with the ceo and president of kraft, roger ferguson, the former vice chairman of the federal reserve. we'll get his ideas on inflation, growth and what's happening at tia craft. i'll seen you sunday, 10 a.m. eastern on fox news and of course back here on the fox business network for mornings with maria, 6:00 to 9:00 a.m.

eastern time. follow this program on facebook, twitter and instagram. importantly, tell us what you want to hear and see on this program. i'll tell you next time. thatill do it >> i'm bob massi. for 35rs i've been practicing law and living in las vegas, ground zero for the american real-estate crisis. but it wasn't just vegas that was hit hard. lives were destroyed from coast to coast as the economy tanked. now it's a different story. the american dream is back. and nowhere is that more clear than the grand canyon state of arizona. so we headed from the strip to the desert to show you how to explore the new landscape and live the american dream. i'm gonna help real people who are facing some major problems, explain the bold plans that are changing how americans live, and take you behind the gates of properties you have to see to believe.