is next. announcer: 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 moment the chairman of pwcus and the pank of america global wealth division, my special guest coming up. susan li has the big headlines impact everything from wall street to main street. susan? reporter: hey there, maria, geopolitical concerns over the durability of the longest bull market rally every. the dow, s&p 500 and nasdaq

closing mixed for the week. the third straight weekly decline for the nasdaq,s longest losing streak in 14 months, dow transports another big loser remaining in correction territory. netflix crushing analysts' expectations thanks to a surge in new subscribers. shares of netflix well into the green for the week. treasury secretary steve mnuchin is the latest name to drop out of the saudi arabia conference. amid growing controversy over the "washington post"'s journalist jamal khashoggi disappearance and apparent killing. the senator from massachusetts telling the federal reserve it should continue to force an order that bars wells fargo from growing any bigger until it improves internal controls and she says that that means removing chief executive tim fong. maria, back to you. maria: thank you, susan. as you mentioned it was another extremely volatile week for the

markets. comments from the president about closing the border as well as the saudi conflict, worries about growth, getting impacted by the federal reserve raising interest rates. all impacting investors this week to. my next guest we go for reaction, bank of america global wealth and chief investment officer, good to see you. >> good to see you. maria: thank you for joining us, are you worried about all of these things? >> you get worried when you see a sizable fall. we call it a backdraft. it's pretty much hallmark of a reset. there's a lot of portfolio resets going on between equities and fixed income and specifically within equities, a lot of flow go from the ultraoverexposure to growth back into value. overexposure to u.s., some of the high market cap names not necessarily to non-u.s. but going down the curve, cash has gone up, long duration assets are going down. worried from the standpoint of how quickly it happened, but not worried about this is the end of the cycle. maria: and, you know, you

wouldn't be surprised, really, when you look at the rates where we are. even in the two-year, for example, we talked about this last week on this program. if you get close to 3% or 3% from the two-year note, maybe i can take money out of stock market and put it in the two-year, i get the safety of sleeping at night and i know i'm not going to lose money on that. >> no question about it. if we put ourselves three, four years ago, the two-year yield was close to zero and the prospects of coming down the curve weren't there. now a two-year yield started out this year competitive to the dividend of the s&p, the two-year yield is close to 3% which is competitive to the 10-year yield that we saw couple weeks ago. so we've gone up 17 basis points in the 10-year yield, and all of a sudden the world's coming to an end. maria: yeah. >> it doesn't happen like that overnight. maria: would you recommend, then, putting money in instruments like that, like a two-year, to get the yield? i don't want to discount the

stock market. we're talking about the backdrop strong. earnings are better than expected. expecting 22% earnings growth for the fourth quarter. >> that's right, this is a reset and the stock market is about total return. the fixed income market people have been taught recently as rates have come down to record low levels, except for this year to look at fixed income as total return. fixed income by its name, fixed income. so if you're thinking about where you allocate, certainly the low end of the curve is very attractive right now. you have very negative term premiums or zero term premium. if you go out duration, extra six, seven years, to pick up 25-basis-points it doesn't make sense. maria: do you think this has been overdone, then? you don't think the cycle is over then, you still want to buy stocks? >> yes, still want to buy stocks. maria: there's a but coming. >> but is coming in about 10 seconds. maria: okay. >> the first part of this is make sure you are diversified. i know it's an easy thing to

say, and we say it all the time. diversification works when you need it the most, and that's right now. heading into a year where the regime shift is happening, getting later in the cycle. rates are grinding higher. equities, don't be overexposed to one area, free cash flow is absolutely critical in this stage and clean balance sheets. high quality, on the weakness, maria, we want to own this weakness, we want to buy into the weakness if you have cash and liquidity there. if you are fully invested, you got to hang on and reset and rebalance at the end of the year and get ready for lower return environment. equities are favorable than bonds. maria: you said a minute ago, there's been a shift growth value, growth being the amazon and the google parent of the world. these stocks, netflix, tesla, tesla though it sold off recently, it's up 80% year to date. is that what you're talking about when you say growth? >> i think because of the advent of what have you done for me lately?

whether you are a fund manager or automated investment program which has a low break point. low number of dollars needed to get into the program, you're going to go into etfs. the etfs own the market cap, large cap-growth companies. >> we will leave it there. chris hyzy. don't go anywhere, tim ryan is my next guest. stay with us. announcer: wall street seasawing all month long, how are wall street ceos managing the vulnerability. >> clearly helped business confidence announcer: maria bartiromo asks tim ryan all of that and more, next. it's easy to think that all money managers are pretty much the same. but while some push high commission investment products, fisher investments avoids them. some advisers have hidden and layered fees. fisher investments never does.

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. maria: welcome back. lot of volatility on wall street this past week. markets a little jittery, wild

swings and abroad in the face of a lot of concerns, amid the jitters, the world economic forum ranked the u.s. economy the most competitive for the first time since 2008. how are ceos feeling in terms of confidence levels out there? we're going to talk about that with tim ryan, the u.s. chairman and senior partner at pwc and it's great to have you on the program. >> great to be here. maria: thank you for joining us. so what are you seeing? we get the economic data on the corporate level and the earnings season has been very strong, up 20% year over year is what we're expecting. you speak to a lot of ceos, how often? >> funny, maria, regardless of sector within the u.s., seniors worry about volatility in markets but confident in the business. the confidence in their ability to grow market share. their ability to drive value to the customers and seeing good results. it's funny, while we see on the news all the types of things

that are happening, confidence of ceos is the strongest we've seen ever. maria: is that partly because end market demand has come back or tax cut plan has boosted things? >> combination of a couple of things, they feel good because post financial crisis, they feel good at adjusting businesses so they are more agile, number one. number two, tax reform has given them ammunition to go into the market and invest in their businesses and invest in the name. they feel good about that, and the fact that the economy is growing as well. good market, confidence in ability to execute and tools they didn't have before in tax reform. maria: what are they seeing in terms of tax reform? they have a long runway. jpmorgan said there's a 60% chance we're going to see a recession within two years, your thoughts? >> tax reform, if we think tax reform benefits are 2018, i would say that's a mistake. tax reform benefits we're going

to see benefit businesses for the next several years. it will certainly help. maria: several years? that's important. >> there's a couple of reasons for that. the investment in m&a and the uptick what we're seeing is funded by tax reform benefits. the benefits m&a will benefit a company for many years. we'll see the residual effect this year and next year benefit 20, 21, and 22. companies are investing in employees and technologies. benefits from those that are derived from the capitals coming from tax reform to do that, but the benefits benefit business, businesses in the next several years as well. we think tax reform that we got this year will help businesses the next several years. maria: i think you have to consider the fact that regulations have changed so much. right? because initially in the last ten years, ceos are sitting on cash because they didn't know what new regulation was coming down the pike to cut into the growth. >> what i would tell you is clearly the tone around business has helped business confidence. the fact that businesses need

part of the solution as opposed to part of the problem, that's helped confidence. fact we're in a flat or decreasing environment, that helped money deployed to other parts of the business as well. we're not spend it on value. maria: tim ryan, the pwc senior business partner, coming up, my all-star panel on the deficit and its impact. >> the deficit crisis rocketing to a six-year high. president trump is ready to do something about it. >> frankly there's a lot of fat in there. announcer: maria bartiromo's all-star b there's little rest for a single dad, and back pain made it hard to sleep and get up on time. then i found aleve pm. the only one to combine a safe sleep aid,

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. maria: welcome back, president trump directing his cabinet to cut 5% of their budget. this comes just two days after the trump administration announced a $780 billion budget deficit for fiscal year 2018, that would be up 17% from 2017. here's what the president told stuart varney about the budget earlier this week. >> we're going to do a lot of cutting of the budget also by the way. which i know it's going to make you happy. we're going to do cutting? >> you are going to cut spending? >> we are going cut spending. >> that's hard, mr. president. >> there's a lot of fat in there, we had to get the military done last time. you know president obama let it go, and i can say beyond president obama. the military was in terrible shape, now we got 700 billion approved. >> the increase in the deficit is coming largely because of flat revenue coupled with increased spending, obviously. joining us for reaction is the committee for responsible

federal budget president, maya mig guinness and "wall street journal" editor james freeman. maya, kick this off with you, a lot of your research in terms of this deficit, and you're quite worried, tell us why? >> i am quite worried. we shouldn't have a deficit anywhere near this large size during a time of such strong economic growth. ideally what i want to have is deficit us that run if the economy is really weak, which it is not right now and surpluses when the economy is strong. we've been borrowing for every new initiative. it's grown our deficit and debt and weaken the foundation that the economy is built on right now. maria: and maya, you say the deficits will soon top a trillion dollars and never come back down unless congress acts. what do you want them to do specifically, maya? >> you're right, this is unsustainable course and deficits and debt are growing faster than the economy every

single year. what we should do and should do now while the economy is strong is put in place a plan that will bring the debt back down so it's not growing faster than the economy. that means looking at all parts of the budget. i would start with the parts that are the biggest problem area, those are social security, medicare and medicaid. nobody wants to talk about them, but our health and retirement programs are growing too fast, and clearly, if you're going to spend more, which congress continues to vote that we should do, we're going to need to raise the revenues to cover that. so i would look at getting rid of a lot of the tax breaks that currently exist in the tax code as part of tax reform, but i think overall would have been a desirable part of tax reform. maria: this is one of those issues, james, where you have this sort of creeping worry, but it doesn't impact peoples or the zeitgeist on that specific day. your thought on the impact of all of this? >> this debt will have to be paid. it's fortunate we have a growing economy.

i think that's critical to affording this debt, but as maya said, i would agree, the major entitlement programs have to be reined in at some point, the fastest growing entitlement over the last year was looking at obamacare, not as big as the other ones yet but growing very fast. i think you look back at the failure to repeal that. that was an opportunity to start reining in the spending monster. if the president is talking about 5% cuts, that's wonderful. but it needs to extend governmentwide, not just that discretionary domestic part of it. if he wants to get a real cut in. maria: you make a good point in terms of obamacare. probably not going to see the president or the congress come out in an election year and say hey, i'm going cut your social security right now. >> yeah, but that's a big driver, along with interest payments on the debt, social security, another category with a big increase this year. maria: are markets focused on

this, james? >> i think long-term, and also as we look around the world, we're in the kind of best house in a crummy neighborhood zone in terms of you look at so many governments more indebted but this is a problem, we've more than doubled the debt over the last decade. this year's numbers weren't as bad as the four straight trillion dollar deficits to start the obama administration but still bad. and i would say this is the big failing so far, the trump administration is not to take a serious whack at spending. maria: you wonder, maya, if the administration or the congress, the republicans do well in the midterm elections? i mean, anybody's guess at this point, if they come back and say, okay, we're going to rein in entitlements now because you said it, that's where much of the money is? >> yeah, but i don't know what was stopping them from the past two years, unfortunately. we have republicans who had long been talking about importance of entitlement reform, and then they had the opportunity in their budgets through reconciliation which

allows them to do this, really without and problem, to make a lot of improvements and fix the entitlement programs and they did nothing. i'm really worried about where the education and honesty about the fact that we have fixed these programs has gone. i want to point out the fastest part of the budget is interest on the debt, faster than any of our entitlement programs, that goes to show how problematic this unsustainable fiscal situation is. though the president has asked for 5% reductions from all of the different agencies in the budget, that's half of a huge spending increase we had this past year. there was bipartisan support to bust the spending caps, bust the budget. we added $320 billion to the discretionary parts of budget, and 5% reduction off of that is still actually an increase. i don't think anybody is yet talking about the serious measures that are going to improve the fiscal situation, and what that means is we're

weakening our economy for the long term and handing a huge bill onto the next generation of voters and our kids and it's not what the country is supposed to be doing to build a strong, sound economy you. >> make a good point about interest rates and the cost of holding this debt because right now, james, the federal reserve is raising interest rates. that could be one of the reasons that the president has been so critical of the fed. >> he doesn't want interest rates impeding growth but he's also concerned, he's responsible for the 21 trillion of debt and paying it, and gets harder as the rates go up. i do think we should keep in mind this is not hopeless, that entitlements can be reformed. we go back to this past congress, it was one vote, the late senator john mccain. if he had voted yes to repealing obamacare, that would have happened, and that would have been a big step toward entitlement reform. maria: when do you think this resonates with people, maya. you did a report how the debt

and deficit impacts individuals. are people worried about this? do they understand the ramification says in. >> i think one of the most difficult things about the issue is having it connect directly to people's lives. it is not a kitchen table issue. it is in my house, my kids don't appreciate that, but it is not the kind of things most of us sit around and worry about with health care bills and the skyrocketing costs of education and retirement and normal challenges, but the truth is this is connected in every way to kind of the economic health and prosperity of our economy and our families. i think we need an educator in chief on why this issue matters so much and really talk directly to voters about how if we continue to borrow our way, we're not going to borrow our way to prosperity, we're going to jeopardize the economy and create much more pain inside of the kind of growth we are trying to build in a sustained way. maria: we'll leave it there and keep following it. hope you join us on the morning

show. "mornings with maria." james freeman, always a pleasure. don't go anywhere, more "wall street" right after this. ve got something important. it's not going to be easy. quicksilver earns you unlimited 1.5% cash back on every purchase, everywhere. actually, that's super easy. my bad. that's super easy. the lexus ls 500 & ls 500h. ♪ take advantage of great offers on the 2018 ls 500. experience amazing at your lexus dealer.

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♪i need never get old . maria: let's look ahead at the big market events in the week ahead that could impact your wallet. it is a busy one for earnings. a quiet monday but a big earnings week with halliburton and ameritrade kicking things off monday. tuesday, business leaders survey, industrial production, the nahb survey on housing, plus on earnings, jetblue, mcdonald's, verizon, lockheed martin, caterpillar reporting quarterly numbers. caterpillar will be important. that is typically a market mover. watch that for indications of the health of the economy. on wednesday, the fhsa services, pmi, the purchasing managers index and more housing data with new home sales out. in earnings, at&t, ford, siriusxm radio, visa, ups

reporting quarterly numbers, one of the most important dow components reports, that's boeing. that will be a market mover. microsoft reporting after the close kick off big tech as well. on thursday, durable goods orders are out, initial jobless claims and the beige book and pending home sales are out. more big earnings news then. alphabet, amazon will report earnings, they will likely move the economy and move markets. so watch those. american airlines, southwest, dunkin' donuts, chipotle, merck, comcast and snap reporting quarterly earnings as well. on friday, consumer sentiment and earnings from colgate round out the week, it will be a busy week. join me sunday on sunday morning futures, a big show on the fox news channel. house judiciary committee chairman bob goodlatte announced an interview with rod rosenstein, he's going to talk to us about that and republican senator lindsey graham, my special guest talking about the week that was and certainly was a busy one. join me live on "fox news

sunday" 10:00 a.m. eastern. start smart every weekday 6:00 to 9:00 a.m. eastern with "mornings with maria." hope you will join us. have a great weekend everybody. that >> announcer: the heroes of the space race capture the imagination of a young boy. >> we choose to go to the moon. >> the world was fascinated. the astronauts were superstars. >> these are the nation's mercury astronauts. [ applause ] >> announcer: it inspires him to collect all kinds of nasa artifacts. >> that's one small step for man... >> it's one of america's greatest achievements, and i think it's something which will continue to inspire. >> announcer: but when he dies too young... >> i thought, "this can't be happening." >> announcer: ...he leaves his widow an inheritance that's out of this world. ♪