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tv   The Claman Countdown  FOX Business  January 29, 2020 3:00pm-4:01pm EST

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that could physically do to a bank or a financial institution. but that's sort of one institution. do you think there's a system-wide risk that may, that could develop from climate change? >> so that's an interesting question. the question being is there a system-wide financial stability risk. i'd say over, over the longer term it's certainly possible. and i would say that sort of feeds into the way we're thinking about climate change as an institution. so as i've mentioned, climate change is an important issue, very important issue, but it's essentially assigned to many other agencies in the federal government and state governments for leadership on that. and importantly, society's overall response to climate change needs to be decided by elected officials and not by, not by the fed. all of that said, if you look at
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our mandate, we've got a monetary policy mandate. and more immediately, perhaps, a supervisory mandate where we're supervising financial markets, utilities and financial institutions, banks, and we have -- we share overall responsibility for financial stability with a number of agencies. and that latter part, i think the public has every right to expect and will expect that we will assure that the financial system is resilient and robust against the risks from climate change. now, i think that's gotta be right. we are in the very early stages, as are other central banks, in understanding just what that means. and there's quite a lot of work going on around the world at other central bankings and at the fed to think that through. but i do think in that sense it has to be part of our role. but not, not the overall response of society to climate change, that's not us. >> and if i could follow up, can you clarify why the fed hasn't signed on to the network for greening the financial system like 40 other central banks
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have? >> so we've attended all of their meetings and taken part in them, and we've been looking at joining in one form or another and talking to them about that. we possibly will do that at some point. so that's an ongoing question. but we're very much attending those meeting, taking part in them. >> [inaudible] >> thank you, mr. chairman. edward lawrence from fox business network. is so there was the signing of a ratified usmca at the white housed today. have you seen business investment pick up at all? if not, what will it take to get that business investment going as this uncertainty is being cleared up? >> yeah. so i guess i'd start by saying that the fact that we've reached a phase one deal with china and the fact that we've moved ahead closer to getting usma agreed,
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those are potentially positive things for the economy, without question. without question. and financial markets, the reaction of financial markets has been very consistent with that perception. a sustained reduction in uncertainty over time should improve business sentiment investment which would provide some additional support for the economy. it's important, though, to bear in mind a couple of things. first, trade policy uncertainty remains elevated. businesses continue to identify it as an ongoing risk. we still have two or even three active trade discussions that are going on in the public square right now. so it habit gone away -- hasn't gone away, and we've just come through a round of talking to our vast network of comments -- sorry, contacts in the business world. and i think clearly these are seen as positive developments going forward, but there's a bit of a wait and see attitude. is this going to be sustained.
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the agreements have to be implemented, too, and that'll take quite some time. so i would say we need to be a little bit patient about the effect on the economy. there's also the global economy. you could, you could well see manufacturing, as i mentioned, manufacturing pmis have started to tick up consistently in advanced economies and emerging market economies. we do not see this as recovery, but it's possible that this mix of positive developments and also accommodative financial conditions could spur further growth. >> michael? >> hi, mike derby with dow jones. do you have any greater sense of what was going wrong with the repo market starting in september? there seemed to be, you know, whether it was a one-off event tied around tax payments and debt settlement or whether there's more structural forces that are basically coming up the repo sector?
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>> as for those to forces, so as we indicated, we would undertake, you know, a serious review of that question and look at both regulations and also pfsly practices -- supervisory practices and be prepared to adjust those in ways that might encourage liquidity to flow more easily in the system as long as it didn't undermine safety and soundness s. and so we've undertaken that. we've done a ton of work. actually don't have anything to announce here today, but i feel good about what we've learned there. you mentioned other factors. we will be announcing our findings -- i'm not going to give you a time, but we're well along in that assessment at this time. i think we also found out though that the level of reserves that we need in the system to conduct our operations without frequent reresort to open market operations was higher than we thought and was higher than others had thought too. we've learned that we shouldn't let reserves go below 1.5
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trillion roughly, the level of early september, at any point x. that means that reserves will move through, in a range over the course of the year that'll be substantially higher than 1.5, but they won't ever go below. so 1.5 is not a target level, it is the bottom of a range in which reserves will be expected to move. >> chris? >> hi, mr. chairman. just wanted to ask about how your balance sheet operations and temporary repos, how they affect the system and who they're helping. clearly, they're mostly designed, as you said, to get -- keep the fed funds rate in the range you're looking for. but certainly the repo market is also used heavily by hedge funds and other wall street institutions. and so how would you explain to sort of main street why you're doing all this for that market, and how would you address criticism that it is helping mostly wall street along with
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everything else? thank you. >> well, let me just stress that we have a very specific and important reason for caring about money market operations generally, and that just is that we -- our monetary policy decisions are transthe mitted through the financial markets, through the money markets into other financial markets and into broader financial concerns. so we care that money markets are operating smoothly, and they stopped operating smoothly briefly back in september. and so we acted. this is a one-time thing that we're doing to adjust the level of reserves so that money markets will be able to operate smoothly on an ongoing basis. repo markets are important because that's where treasury securities, the purchase of treasury securities -- which is the way, you know, part of the way the federal government is funding its operations -- the way those are financed. so these are largely treasury securities that have been purchased by dealers for distribution to, and buyers to a
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substantial extent. that's what's going on in the treasury repo market. so it's just financing for that. again, we don't -- that activity a market activity. we're not looking to eliminating volatility or protect anybody from volatility at all. what we care about is that roll tilt in the repo market can affect the transmission of our policy decisions to federal funds rate, and that really is important for the public. >> [inaudible] >> nancy -- sir is, with marketplace. chair powell, is the fed going to vote tomorrow on changes to the volcker rule restrictions op on banks investing in venture capital funds? what can you tell us about what the fed considering, and why make those changes? >> sure. so we will be looking tomorrow and voting on a new part of the existing volcker rule, and that is the covered fund provisions of the rule. and we'll be making a bunch of
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proposed revisions that we believe are faithful to both the letter and the spirit of the law. we're going to put those proposals out for public discussion, and we're going to listen carefully, as we always do, to public comments on those proposals. again, we believe that they will be -- and you'll see them tomorrow -- will be, you know, publicly -- we have a board meeting tomorrow to do that. >> [inaudible] or also are you changing the rules for hedge funds and private equity funds? >> it's covered funds. so it's that -- it's not the proprietary trading part of volcker, it's the covered funds part. >> and is there a chance that banks could take this and run and maybe even get involved in mortgage-backed securities again? risky investments? >> you know, we'll, we think that what we're doing is very consistent with safety and soundness and absolutely consistent with the letter and spirit of the volcker rule. we'll be getting comments from people, and we'll be looking
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into that question with among many others. >> greg? >> thank you. thank you, chairman powell. i'd like to turn your attention back to china expect health of its financial sector in particular. and i guess i'm basing my question on reading the transcripts from 2014 that came out earlier this month. in march of that year, there was concern about the chinese economy, and one of your colleagues on the fomc at the time asked the staff about how the chinese economy would hurt -- hit the u.s. economy. and the staffer said that there was a, what they were worried about was not only the chinese economy slowing down, but there was the financial sector. and the quote was, "there's a tremendous amount of dodgy loans in china." now, i was wondering if you could give us an update on these problems in the chinese financial sector and how you think it might impact the economy, particularly now that they've been hit by this unexpected shock.
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>> well, china has had a problem for some years including from that period, 2014 up until, i guess, '17 or '18 which was, essentially, just a lot of debt. for an emerging market, for an economy at the stage of evolution of the chinese economy, they had very high levels of debt. not sovereign debt the way we think of it, but more business debt. state-owned enterprises and also just private businesses. and a couple of years ago the authorities decided to try to get that under control, to stop the growth and to control it. and as i mentioned, that's one of the reasons why chinese growth slowed, and it's one of the reasons why global growth slowed, because we felt that. and and they've actually stuck to that even during this difficult period when they were experiencing, you know, strains from trade negotiations and that kind of thing. the authorities have stuck to that and, again, have continued
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to try to do that. to try to control the growth of debt, and that's important that they do that. we don't think that there's any imminent risk there, although as you point out the coronavirus thing a significant thing which will have some effects on the chinese economy, at least in the short term. chinese economy is very important in the global economy now, and, you know, when china's economy slows down, we do feel that. not as much as countries, though, that are near china or that trade more actively with china like some of the western european countries. we have, you know, 85% of our my is domestic. we have a much smaller exterrible trade sector -- external trade sector just because of our location. >> [inaudible] >> hi, brian shaw here, young finance. so the come combination ofty bow
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purchases have been described as liquidity, i'm just wondering if you semantically agree with that, and secondly the impact on risk assets. i don't know if that's something that the board or reserve banks are formally looking into or just looking at what the effect has been. how are you kind of thinking about that going forward? thanks. >> well, so two questions. in terms of liquidity, i think what we're doing is what i said, we're trying to raise the level of reserves back up to a level so that banks can meet their reserve requirements and that there's enough reserves in the system that we don't see reserve scarcity the, and we don't is have to use repo operations to provide additional -- so as i mentioned, we believe we can get to that state at the current pace sometime in the second quarter. in terms of effects on risk assets, as i said earlier, it's very hard to say what is affecting financial markets with any precision or confidence at a given time. it's not our intention to change the stance of monetary policy.
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these were designed to provide more reserves and really to do that in order to enable better transmission of our, of our rate decisions into the economy under our chosen framework. that's really the purpose of what we're doing. >> dean? >> hi, jean young with m and i. i wanted to ask about the framework review again. would a shift of focus to inflation over an average period, would that call for a different policy stance if you made that shift? and whether or not we know the answer to that question, would the fed consider changing the stance of monetary policy for that reason even if there was no change to the economic outlook in. >> well, as you know, we're comfortable with our current policy stance. we think it's appropriate, we think it'll remain appropriate as long as data coming in are broadly in keeping with our outlook.
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over time though, let me take a step back. over time an average inflation targeting would be different than the current framework in the sense that it wouldn't be, there would be some aspect of trying to make inflation average 2% over time which means if it runs below 2% for a time, it has to run above to bring the average up. so that is a different framework. our current framework is one where we say we'd be equally concerned with deviations of inflation from target on either side. but that isn't, that doesn't suggest an intention specifically to have those deviations be symmetric. in other words, consistent with that would be having all the deviations be on one side which is what we've had, twai. so i think it is a change in framework and over time it would lead to a different approach to policy. again, i'm not trying to -- i don't want to comment on the current stance of policy which we do think is appropriate.
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>> john? >> [inaudible] with the l.a. times. wanted to ask you about the stock market by historical comparisons as you note, valuations are considerably high, and just wonder how much discussion and concern you and your colleagues have about that and what risk you see for the economy. >> so we look at a very broad range of financial conditions. with every one that we look at, and when we look at financial conditions, what matters for the real economy is substantial changes or material changes in financial conditions that are sustained over a period of time. if i can, maybe i'll answer that in the context of our overall financial stability framework. that's one way to look at it. so when we look at financial stability, we look at really four pillars to that, the first of which is leverage in the financial system that is at a comfortable level. our banks, particularly our
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large banks, have high levels of capital. the second divides into households and businesses. households' debt to gdp has been coming down since the financial crisis. it's not moving up. it's at low levels compared to where it was before the cry ice. -- crisis. not every household in the aggregate in debt is in a very good place. business debt has been moving up, we've been calling that out for substantially more than a year, and it's something we're focused on, and we've taken appropriate measures and are monitoring carefully. but we think it's not something that would threaten financial stability but more be an amply fire. and the other is asset prices, getting to your question. we do see asset valuations as being somewhat elevated, i do, somewhat elevated. if you look at risk spread, they're narrow. pes, they're high. a good way, one way to think about equity prices though is what's the premium you're getting paid to own equities
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rather than risk-free debt, and that's also at fairly low levels but not extremely low. so realliuationings are high but -- valuations are high but not as extreme. the final factor is players in the financial system funded with stable funding, or is there a lot of run risk, and the answer is very stable funding for the most part. if you look at overall what you see, in my view, is vulnerabilities to the financial, to financial stability are moderate overall. >> katie and then -- [inaudible] >> hi, katie o'donnell, politico. i wanted to know do you support governor braynard's vision for the community ren. act reform, and is something we could see the fed formally propose at some point? >> so let me say that i think this is a good time to do, to do, to update cra really in a way that is a win/win both for the intended beneficiaries --
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low and moderate income communities -- and also for banks that would like to have more certainty about, about what does and doesn't qualify and that sort of thing. the law can both be more effective and more efficient, it comes down to, and we think this is a good -- it's also just ad good time to take onboard the way the delivery of banking services has changed through technology and demographic change as well. we worked very hard to try to get on the same page with the other two agencies. we think that an interagency final rule together would be the best outcome. we're sorry we haven't been able to get there, and we still hold out some hope that we will be able to. we've spent a lot of time on research and analysis and looking at meaningful reform. you saw governor braynard's recent speech presenting some of the thinking in the analysis, and we haven't made any decisions about what we're going to do. i mean, our focus has been entirely on trying to get to agreement with the occ really.
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so haven't made any decisions about what we're going to do going forward. in terms of, you know, governor braynard led our oversight committee over these activities for many years, and i asked her to take the lead on cra modernization which is a high priority for us. i was comfortable with her speech, and i'm comfortable with the work we've done and with the fed's position on this. as i said, we haven't chosen to bring a proposal forward. we haven't decided what to do going forward. and we're not going to comment on the other proposal, it's just not appropriate to do. it's not about us, it's not about our views, it's about the views of the interested parties. >> hannah? >> hannah lang with american banker. thank you for being here today. i wanted to ask about vice chair quarrels' recent speech is -- speech p in which she laid out
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some suggestions for changes to the supervisory regime. do you agree with his approach and are there any plans to codify some of these suggestions later in the year? >> so i do agree that the principles that he articulated of firm and fair supervision and effective transparency and communications. i also think it's a good thing that we would have brighter lines to define our supervisory portfolio which we haven't really had to date. remember that when a firm moves from one portfolio to another, that doesn't mean that it's level of scrutiny or supervision will change. so, and i also thought that, you know, he's raising some very interesting questions about -- in the first part of the speech where he's talking about regulation and supervision, and, you know, how to, how to balance the desire for transparency and due process in everything the government does with the needs of confidential supervision. it's a very challenging question.
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it's one that could use further thought. and as far as the specific, you know, proposals, you know, they're interesting and need further development, and we'll need lots of comment and that sort of thing. >> okay, this is the last question. mark? >> thank you. there we go, sorry. had it upside down. mark hamrick with bank rate, thank you. i wanted to ask you a question about one of the unintended consequences over the years-long low interest environment, and that is savers haven't gotten as much return as would have otherwise have been the case. what would you say to those individuals who have seen the fed again cutting rates eroding their ability to get a higher return on their savings, and how much would you take their plight into consideration? how much can you sympathize with them? >> sure. so we, we are assigned a job by congress, and that is to use our
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tools to pursue maximum employment and stable prices, and that's our focus. now, monetary policy's a blunt instrument, but it's a powerful one. so i think if you look, look at the time since the financial crisis. that was in the wake of fairly modest growth, it was a powerful recovery in the labor market. and part of that just is the effect of lower interest rates. so many, many people benefit from low interest rates. in fact, you don't hear -- when you talk to low and moderate income communities, one thing you don't hear is you ought to raise rates. that's not what you hear. you hear quite the opposite which is, you know, please do whatever you can to keep this exprangs going. i absolutely -- expassenger going. if you're living on just the interest in a bank or on fixed income generally, then that's a challenging thing. on the other hand, if you own a home, home values, the housing market has recovered, other financial assets have recovered. so, but yes, for some people who are limited to those services
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plus whatever help they get, it can be challenging. we have to do what's best for the overall society and the economy. those are our orders from congress. >> okay, thank you. >> thanks very much. liz: all right. it is not jobs, not the economic expansion but the wuhan coronavirus that has the federal reserve on 'em. you just heard fed chair jerome powell singling out the deadly disease that's killed 132 people in china and infected more than 6,000 worldwide. listen. >> there is likely to be some disruption to activity in china and possibly globally based on the spread of the virus to date and the travel restrictions and business closures that have already been imposed. of course, the situation is really in its early stages, and it's very uncertain about how far it will spread and what the macroeconomic effects will be in china and its immediate trading partners and neighbors and around the world. so in light of that uncertainty,
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i'm not going to speculate about it at this point. liz: okay. so just as chair powell said that, this headline hit the wires: google temporarily shutting down all china offices due to the cope that virus outbreak. that's according to the verge web site. we do have a call in to google to confirm that, we'll let you know what they say. powell speak after the fed held rates ted at its january meeting in a unanimous decision. the central bank has interest rates still in the range of 1.a 5-1.75%. but you look at the market reaction which only began, we should say, during the q&a session, markets slipped from highs as the news conference went on. you did have the dow jones at one point up 221 points, right now it's the up 56. the s&p high of the session, we have that at about 17 points of gains. we're now just 3 points to the upside. the nasdaq had been up 59, it's now up 24. let's flip it over. maybe we can get a better window
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from the ten-year treasury yields. they fell to session lows at about 1.581% as powell spoke. right now they're at 1.59%, but earlier they had been at 1.61% before the entire announcement. so, obviously, we've been checking interest rates which often react to lower interest rates. it doesn't usually help financials and, i deed, that's what you're seeing. jpmorgan, morgan stanley are, bank of america, goldman sachs and citigroup in the red. the dollar earlier was stronger. right now you can see it trading against the yen, the pound, the yuan, the euro and the pace sew, and it is a mixed picture at this moment. gold, this is what i noticed. gold had been flat all morning. now it is up about $4.40, a minute ago it was up $5. let us drill down on what fed chair powell just acknowledged, and that is that risks to the u.s. economic outlook now include the coronavirus.
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he's only echoing what apple ceo tim cook said after the bell yesterday even as he took a victory lap on a big earnings beat. cook issued a wider than normal range for the fiscal second quarter revenue forecast. that range, 63 billion to 67 billion due to uncertainty, he says, surrounding the coronavirus. so you've got a $4 billion wide gap that you could drive a truck through there. the company has had to shutter one store only and limit hours at other locations, but during the investor call last night, he talked about the impact on iphone maker's supply chain. >> we do have some suppliers in the wuhan area. all of the suppliers there araller the nate sources, and we're -- around alternate sources and we're working on plans to mange any expected production loss. we factored best thinking in the guidance that we provided you. with respect to supply sources
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that are outside the wuing hand area, the impact -- wuhan area, the impact is less clear at this final. liz: now, despite that sort of pick if situation, the stock continues its spectacular run. it is hitting new record highs. this is a ten-year picture, but today, yes with, it hit another record high multiple times. so we're looking at the stock at $9.68 to $327.38. so let's look at the airlines. they're deep in the red because they're bracing for more impact. china accounted for about 7% of passenger revenue last year, and united airlines which at this hour has now suspended 24 u.s. flights to beijing, hong kong and shanghai for a week, at least for now, starting saturday. so you have ual down about 2%. american airlines is flat, let's call it that, but they've had to us pend flights from r.a. to china. they'll do that starting february 9th. and british airways has canceled all flights today.
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they now have halted all flights to china, delta moving lower by 1.75%. mcdonald's today you dated investors -- updated investors saying that the actual impact on mickey d's business right now is, quote, fairly small. but starbucks warned the coffee giant has been forced to shutter more than half of its 4,100 cafés on the mainland. mcdonald's is up 2%, starbucks down about 1.66%. so if the virus fears are altering how global companies conduct business, let's get some interpretation from our power team. cfra chief investment separatist sam stove al and brian nick who is chief investment strategist with at nuveen. i'm glad all of you are here. sam, i'll begin with you. what did you make, interpret what the fed chair said about
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the coronavirus, and do you think that's why the stocks have pared their gains? >> well, i think he was acknowledging coronavirus is an uncertainty that affecting the global right now. the globe right now, but he just doesn't know how deep it's going to go. he's indicating that he's going to keep his finger on the pulse of this and make policy if need be. i think what was more important, in my opinion, was basically saying that inflation is something that they're having a hard time, in a sense, encouraging, if you will. and as a result, we probably end up seeing rates remain low for a longer period of time. liz: well, yeah. and john, not only did he talk about inflation and the fed did not want to be patient about this below 2% level, but he also talked about asset valuations and specifically said they are, quote, somewhat elevated. let me put that in regular terms, stocks are too rich at these valuations. what did you think about that
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comment? >> well, the challenge for the fed is that there's a term structure of interest rates, liz. and to the extent that they're lowering short-term rates, they're buying all these bills, it lowers and it has since october lowering the two-year and five-year u.s. treasury rates. which affect competition for equities. they help finance corporate bonds and would increase, elevate equity values. so there is an interest rate effect with the fed even though they're saying that the policy is staying, you know, pretty much steady. it is having a positive effect on the equity market. liz okay. indeed. we do have this huge expansion. brian, this is not an easy thing to deal with. he outlined beginning first with the statement that the expansion continues, the labor market looks incredibly strong, and we still see some very big positives in all of this. however, doesn't that then possibly lead to some e real problems down the line if you
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keep rates this low? >> i think that's right. and my big takeaway from his comments were really that the bar for both raising and cutting rates is actually quite high, perhaps higher than the markets had expected coming into this. i think we all knew the likelihood that the fed was going to raise interest rates was quite low. the point about inflation, i think, is well taken. but there's enough positives x he actually reiterated, he thinks global policy uncertainty has diminished, cautiously optimistic about global growth. those are the two things, according to powell himself, was behind the cuts last year. i think the market, which continues to expect and price in interest rate cuts this year, i think they're setting themselves up for disment with. liz: -- disappointment. liz: well, are they? this was so interesting, did you not think so, john, when he was asked specifically about it's not qe, that means they're buying so many treasury bills. i mean, specifically they talked about how billions of dollars worth of treasuries are being
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bought by the federal reserve that at some point if things continue to get so good, they will have to scale back, and then you're faced with another taper tantrum. >> well, i'll pick um on brian's -- up on brian's comment. the market to some extent is discounting a ease in the federal funds rate. listening to chairman powell, i got no impression that they were ready to cut rates anytime soon. and so as a result of that, i can see why there's a disappointment in the equity market with respect to pricing future fed moves. liz: 390 billion over five months, that's what the fed has added to the balance sheet which we just showed you. sam, for the investor, for the stock investor, the bond investor, you know, tell us where you see opportunity when you look across the spectrum of all the sectors out there? >> well, we're seeing a response today where investors are again gravitating more toward the cyclical areas that basically say there is likely to be some
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spurring of economic activity. and so as a result, technology, industrials, materials, communication services likelied to do well whereas the defensive areas that investors had jumped into because of the worries over the coronavirus such as consumer staples, real estate, utilities are giving back some of their gains. so i think the real question is what's going to, what are earnings going to do for us for the remainder of this reporting period and into 2020, because i think a lot of the move that we have seen over the last three months has been anticipation that the economy and corporate profits would start to be ramping higher. liz: you know, tomorrow, brian, we're getting fourth quarter gdp, and we're expecting, what, what do you expect to see here? >> we think it's going to be the slowest quarter of 2019, the good news is it's backward looking -- liz: how could it be the slowest? we had such a bang-up holiday season, did we not?
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>> yeah. consumer spending should continue to be the main support, residential construction could be adding positively. we still saw just this morning a big blowout in the trade deficit for goods which is going to tend to contribute negatively to gdp, and we probably will continue to see because we still have this manufacturing recession here and around the world, a draw down in inventories, and businesses are not making new investments yet that would be a positive offset to that. liz: all right. the dow is up 88 points but well off the highs of the session. gentlemen, thank you. john civil a ya, sam stoveall and brian nick, we'll see you next time because the fed meets multiple times during the year. it's not just the fed dominating the markets at this hour. investors are anxiously awaiting major tech name earnings after the belled today. they include microsoft, facebook and tesla. a quick check on how these stocks are performing at the moment. forget about it. look at tesla right now, up $21 ahead of numbers, you've got microsoft up $5 -- sorry, up
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about $2.89. ing and facebook is up $5.75. facebook hitting a brand new all-time record. so which earnings reports have the biggest impact on our markets or at least the potential? i want to bring in our floor show traders, teddy weisberg, pick one, any one. >> pick one, any one? [laughter] well, i've been picking facebook the last day of the year for the last four years with you, liz. liz: true. >> it's a stock that we've been long for a long time, and we continue to be long. i hate to pick individual names, but they're all three decent names. tesla i'm not so sure about but, clearly, as far as i'm concerned, the pick of the litter continues to be facebook. liz: wouldn't you know as it pertains to guiding the markets or moving the markets, phil, which one has that muscle? >> i gotta go with microsoft right now. i mean, you look at this stock, you know, people were writing this off many years ago, they changed their model, they have mom new idea -- some new ideas,
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and now they're among the top. i think they're relevant again. at the time where we thought a few years ago where microsoft wasn't going to be relevant, i think it is. i think it's a solid indicator of the overall sector. it's not as flashy as, say, facebook. it's not as quite risky long term as tesla, so i think it's kind of the middle ground, and i think it gives you a better view of the overall market. liz: well, today it is hitting a record high, and it is up 60% year-over-year. luke, let's not ignore any of the other names that are out there, and we'll talk about boeing because they reported earlier this morning. but tell me what you think. is there a name on the calendar, on the docket that you feel will really buffett these stocks here in one way or another one way or down? >> yeah. i think microsoft just because if it's such a big percentage of the index, if it goes up or down, it's going to move the index. kind of like you saw with boeing. if boeing wasn't up today, i don't know if the market would be up.
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after those earnings premarket it was down, and then it started to go up. i think right now the way this market is since a lot of the gains are coming from such a small percentage of stock, you've got to look at the ones that are the biggest percentage of the market. and what those earnings do, those will move the markets. and i was listening to chairman powell, and i haven't rolled my eyes so many times since i got off the scale after my diet. [laughter] i do not understand if you're supposed to do what's best for the country, how can in the last ten years there's been more income inequality than any other time? i don't know how they're measuring inflation, but my personal inflation is way up, right? liz: yeah. >> health care, rent, baby sitting. i just don't, i don't get it. liz: you know, he did say it was surprising wages have not prisoning more quickly. i just -- risennen more quickly. i just had this argument with institute varney, month over month, a whopping three pennies. why isn't that catching up?
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>> yeah. i'm laughing because then i'd be crying. you know, i just don't get, i just don't get these numbers, how they calculate inflation, how they look at this stuff. it doesn't make any sense. and if everything is so great, why did he ask so much in the last five months -- add so much to the balance sheet? it's scary. liz: not qe. teddy, phil, luke, we've got to run. thank you so much. boeing shares getting a lift despite swinging to their first annual loss in 20 years. the price tag attached to the grounding of the 737 max fleet has now soared to nearly $19 billion which, if you can believe it, was actually below the worst case scenario figures in an lists had feared -- analysts had feared and modeled for. new ceo david calhoun predicting that the max will not only fly again, but also win back the public's truth. the boeing chief saying that the company has nothing to hide and that management has a responsibility to listen to all
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employees, a clear reference to multiple red flags raised by everyone from lower tier engineers, aircraft test pilots, etc. and those were uncovered in the wake of the max crisis. boeing shares up about 2.25% to $323.77. and, folks the earth might stop rotating on the axis on this news. one-time newspaper boy and longtime billionaire investor warren buffett has tossed his last newspaper holding. berkshire hathaway announcing the sale of its newspaper unit which, by the way, includes the buffalo news, the omaha world herald, and they're selling it to lee enterprises for $140 million. this is shocking on two fronts. number one, buffett rarely sells any business that he has bought. and, by the way, he bought the buffalo news in 1977. he told me for 13 years now that he would never sell the buffalo news. and over a decade ago, back in 2009, i asked vice chair charlie
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munger and billionaire board member bill gates exactly that. berkshire has significant positions in newspapers, so this is to the two board members sitting here, buffalo news and the washington post. this is not an expanding and growth sector now. obviously, newspapers are in big trouble s. there a point where you turn to warren and say, this is a shrinking sector, it's not working anymore, we need to get out? charlie? >> warren already knows that. we don't need to talk about what we already both know. but we have this system where we have some investments where we don't discard them just because they're declining. so we aren't perfect gin rummy type capitalists that are always discarding, always adding. we have some things that we're faithful to. we're married, so the speak. and we're married to these things, and we will play out the
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hand. >> buffalo news, i think, has handled the challenges working with their union, figuring out how to push forward as well any newspaper company. and, you know, this idea of being loyal to the companies that you buy 100% of, that's participant of the berke her -- part of the berkshire franchise. are. liz: not anymore. things do change. they're not married to it, as charlie munger said, they're divorced now. newspapers have struggled, we know that, but berkshire or's stock inching higher about a quarter of a percent, look at the iowa-based lee enterprise company shooting for the stars. it's up 64%. earlier it was up 82%. it is just a $2.07 stock, but at the moment investors like it. let's go back out to the federal reserve. edward lawrence was in the room during the news conference. he just with jumped in front of our cameras. >> reporter: yeah. outside of the coronavirus, there was three big financial news items that came out of this. want to talk about the balance
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sheet. jay powell says they don't want the balance sheet to go below 1.5 trillion, that's the bottom line, and have it good fluctuatp and down to stabilize the overnight repo market. the second thing is inflation. he wants to make sure that inflation gets back to the 2% level. he said pce is running about 1.5%, and he is not satisfied with inflation being that low. he's also said they made a change in the fomc's statement there saying they want to get inflation back to 2% target, not near 2% target. so there's no ambiguity there. the third thing that came out of this, business investment. he says that the trade uncertainty has cleared up some of that wiz investment that's come through. however, he says, it's going to take time for these trade deals to cycle through the economy and get the benefits there. listen to his comments. >> clearly, these are seen as positive developments going forward, but there's a bit of a wait and see attitude. is this going to be sustained. the agreements have to be implemented, too, and that'll take quite some time.
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so i would say we need to be a little bit patient. >> reporter: now, he would not say if that implementation or we'll see those effects in mid this year, end of this year, just saying it would take some time before companies feel comfortable with that. liz? liz: and let's not forget yesterday president trump tweeted lower the rates even more. doubt that's going to happen, at least for the moment. edward, thank you very much. all of this happening, certainly, as the parent company of victoria's secret angels end e joying a headline-driven halo effect right now. elle brands surging to the top of the s&p 500 on a new report that its ceo, retail iconless wexner, ready to stand down and sell off the famed lingerie brand. shares of the company are moving higher, but this news certainly no surprise to the claman countdown faithful because charlie gasparino, way back in november, broke the story that the heat was on for the struggling retailer and its head honcho. here was that tweet saying les
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wexner expected to face act pressure to get out and dump or at least break up the company. charlie, you had it. >> you know, here's the thing, you know, it's always good to be early, and one of the reasons why it's good to be early for our viewers that if you traded back then, bought some of the shares back then, that's when you made money. you didn't make money on the journal report today because that moves it today. you make money before the report happens that, you know -- liz: it's up 12% right now. you may have made a little more if you bought it recently. >> if you bought it on the news, you didn't make the money, you know? that's the point i'm making. that's why fox business is so important, that we give you the insight before it happens and well before so you can actually buy the shares. here are some of the changes that's facing elle brands, it's, just say, a matured company. it's not making a lot of money. victoria's secret is a very mature brand, you know, it's past its prime, so to speak. these are always ripe for activist plays, and that's the
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tip that we got, that the activist play was going to be to basically shake this company up. and one of the ways the levers they had was wexner. we canner in's been there for a while -- wexner's been there, founder of it, billionaire in his own right. people saying he hasn't done how much with it. on top of that, he had this crazy association with jeffrey epstein all those years until epstein went to jail. and jeffrey epstein, you know, that sort of taint has, gives the activists an attempt to go in there. liz: yeah. charged with rape and underage girls on jeffrey epstein -- >> right. you don't have to replay that, but let's be clear, jeffrey epstein was les wexner's money manager, confidant and, you know, it was essentially a company employee of l brands until he went to jail in 2008, essentially. so that's when, apparently, this relationship broke up. and les wexner only, you know,
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sort of grudgingly and recently has thrown -- liz: boy, would you have made money if you bought on your report. liz: guys, look at that. had you bought on gaspo's report, you'd be up 46%. >> yeah, it's pretty amazing. you know, it's interesting that, you know, fox business, that's what we're good at, i think. we're good at showing you trends that are coming rather than just explaining -- you know, anybody can tell you what the fed is doing, because they just did it. [laughter] in open court, you know? our value added is trying to get way ahead of the curve, you know? listen, these are -- stop wrapping me. i'm almost done. liz: and your charm. [laughter] >> right. we try to give you, what liz tries to give you is the fact that you're going to get there beforehand, we tell you who our sources are -- liz: the show. >> the show in particular, closing bell show, and that's when you get your value added.
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you're not going to get it listening to cnbc talking about a press conference. liz: charlie, thank you very much. nice work. >> i'll see you in miami. liz: super bowl. well -- >> do i have to wear a suit? can i wear, like, a hawaiian suit? liz: don't wear a fanny pack or a tank top. >> oh, come on. liz: closing bell ringing in 12 minutes. [laughter] the dow is up 49 points. what happened to 221-point gain? it's a little bit fumbled here, but up next, one global restaurant chain moving beyond meat as another jumps onboard the faux food fad. that's straight ahead. and "the claman countdown" headed for south beach. don't miss our live show, yes, with charlie as well, from the site of -- >> i'm wearing a tank top and a fanny pack! liz: -- in miami, florida. friday, 3 p.m. eastern -- >> very tight -- liz: and we have got the hottest trend right now, that is betting. >> can i wear a speedo on your
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show? liz: please don't. you know -- >> a speedo. liz: i'm already feeling my lunch coming up, thank you. [laughter] you diet. exercise. but if you're also taking fish oil supplements... you should know... they are not fda approved... they may have saturated fat and may even raise bad cholesterol. to treat very high triglycerides, discover the science of prescription vascepa. proven in multiple clinical trials, vascepa, along with diet is the only prescription epa treatment, approved by the fda to lower very high triglycerides by 33%, without raising bad cholesterol. look. it's clear, there's only one prescription epa vascepa. vascepa is not right for everyone. do not take vascepa if you are allergic to icosapent ethyl or any inactive ingredient in vascepa. tell your doctor if you are allergic to fish or shellfish, have liver problems or other medical conditions and about any medications you take, especially those that may affect blood clotting. 2.3% of patients reported joint pain.
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when you work from home. i'll be in my office. download audible and start every day off right. liz: we've got this alert for you. we're watching the dow very closely. it is now up only 37 points after having been up more than 220. stocks slipping in these final moments of trade. moody's has just issued a warning that the coronavirus will affect the actual tourism revenue from hawaii. they're adding guam now and the commonwealth of the northern mariana islands. so hawaii, guam and the commonwealth of the northern mariana islands. and google just moments ago has confirmed to reuters that it is, in fact, shutting down all its offices in china temporarily due to the coronavirus outbreak. we've got alphabet google still up about two-thirds of a percent.
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this is the intraday picture, so we're noter inly at the lows, but we're -- not certainly at the lows. alternative meat giant beyond meat putting investors' heads on a swivel at this hour as it faces mixed signals from fast food chains. kristina partsinevelos, what's going on now? >> you have beyond meat in 4,000 locations, i know i tried the breakfast burger over there, and they have announced they were removing it from the menu because it didn't resonate well with customers. there's another rumor this morning too, if you go on mcdonald's canada restaurant, you cannot find any of the plant-based burgers as well. it's not on the web site over there, so there's some rumors milling about about that. however, here in the united states there's some big partnerships that were recently announced. hardee's will be serving beyond meat. you have denny's as well as dunkin' donuts, a partnership that's already in existence. and just today kentucky fried chicken announced that they're
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going to be making a beyond chicken burger. so that would be, what, bfc? because of that news with tim horton's, you did see the stock down almost 5% and the rumors on the mcdonald's partnership in canada, but that is just rumor thus far. liz, back to you. liz: i love me some canadian steak. wellington's, great restaurant. >> canadian steak, i'm like, where are you going with this? liz: they like their red meat. thank you very much. let's bring in our all-star countdown closers. together they've got more than $1 trillion in assets, senior market strategist ryan dietrich, craig hall hand and bmo bond fund portfolio manager scott kimball. ryan, to you first. tell me what you're buying on >> liz, first off a fed day. you tend to see volatility. we wouldn't put too much into that. we like who got us into. >> the party.
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we like cyclical names. we do not see recession in 2020. industrials, financials, technology. emerging markets are very cheap. looking at double earnings this year. 14% earnings growth in emerging markets. that group definitely pulled back easily. those canned do well in 2020. liz: craig, the world has been trap pelled. they have been trampled i'm getting out of market. last year as we hit 27,000, 28,000. this year, before that, two years ago, where do you see the bull bark met at the moment? >> we believe it is still intact. we measure the market to be priced 14% below our estimate of fair value. we believe this bull market can go on at least another year. i agree with previous commentary. we like industrials, consumer discretionary, technology, the same leadership we've seen for 11 years. we still think it is going to lead. liz: scott, you're our bond guy.
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you heard reference of high yield bonds in the top fed power panel. be careful of these things. it seems to be frothy at the moment. is there anything you still like there and what? >> challenges with fixed income, whether you're looking interest rates by way of u.s. treasurys or we call credit markets looking at corporate bonds which is investment grade through high yield, there is perpetual grab for high yield from investors. because of that the yield spreads what we think about in the bond market, how much more am i getting owning this, versus that, have really compressed. our viewpoint this is strong opportunity to diversify, reset the expectations, look across the marketplace. if you haven't invested in for example, mortgage-backed securities in the portfolio, a great diversifier, in a lot of cases you're not giving up too much yield owning them versus corporate bonds and there is a lot less risk. liz: you like some of them. i don't know if we can put up
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some of then again, the wells fargo bond out there, isn't that bbb rated? that. >> that is -- liz: 5% is the yield, nice but i just wonder? >> this day and age that just shows you the transition we've had in the interest rate regime 5% makes you raise an eyebrow but in our core plus bond strategy with we're looking for incremental yield opportunities. where we think market has a disconnect or something. could be wrong. if we look at wells fargo commercial mortgage-backed security, perhaps the market says you know what? strip malls here, some malls, retail exposure, amazon effect. i want to pull back out of this look around for other opportunities. that might create yield opportunity for us, 5% for a bbb rated mortgage-backed security compared to where double b high yield is pricing in many cases well below 5%. liz: ryan, why has the market showed most of the gains today?
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is it something powell said, coronavirus fears? google is shutting down all operations temporarily in china? >> could be combination of those things. let's not forget, liz, we're very spoiled. we had back-to-back down days for the first time in 30 days. that tied the longest streak since 1955 markets get volatile when they're nonvolatile. we had a tranquil time. markets are volatile here in february and march. liz: as he said, s&p turned negative. craig, give me the sense when you really start going elbow deep into buying more? >> currently the yield on the 10-year treasury is far below the yield on s&p 500. that hasn't happened that often. when it does, a great market follows. we see bonds expensive, stocks as cheap. liz: okay. finally scott, give you the last
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crack here. do you ever look at treasuries at this point? the yield plummeting in fear? >> reality interest rate market has gotten so globalized, if you diversify your risk in any way from as set allocation perspective you do have consider treasurys especially when you're looking for a sovereign bond. most of the rates for other sovereign issues for example, the german are negative. you have to consider treasurys from asset allocation perspective. liz: ryan, look at the dow. it is up just 17 points. we've seen quite the swing here, quite the selloff. what do you do on a moment like this? the other day we were down 400 points. all of sudden we popped up the following day? >> don't panic in my opinion. volatility is coming. use pullbacks as opportunities because this bull market is still alive and well in our view. liz: ryan, craig. craig agrees. scott. great to have you in the final minutes.
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markets are slipping. [closing bell rings] s&p turned negative. dow make that holding on to 11 points of gains. massnasdaq up four. that will do it for "claman countdown." coronavirus i think fed mentioning that hit stocks. melissa: losing steam in the final hour of trading. stocks off the highs of the day after the federal reserve left interest rates unchanged but share jerome powell called the outbreak of the coronavirus a very serious issue and that it's too early to say what the effects will be. now google is temporarily shutting down all china offices due to the outbreak. on back of all of that, the dow closing up 10 points. you could see it fading into the close. in the green for the second day in a row. i'm melissa francis. connell: i'm connell mcshane. welcome to "after the bell." the google head lien towards the close. it didn't hope i guess along with jay powell. s&p looks like it will settle lower here, down almost three

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