>> the following program is paid for by skye bridge media llc. anthony: i am anthony scaramucci . welcome to "wall street week ." today it' s about market volatility. the federal reserve, and activism. gary: i am gary kaminsky our panel debates capitalism and what it means for you and your money. >> this show has never been solely about investments. we talked about anything that affected people and their money. >> from times square in new york city, the new "wall street week

." anthony: we are pleased to welcome dick groat also, former chairman and ceo of the new york stock exchange, donald, the chairman and cofounder of casablanca capital, and james founder of new oak capital. gary: your focus on activism, as what is this a climate where investors benefit? dick: the. that investors don' t benefit is a lot of nonsense. it' s a little bit like -- he may have a comment on this -- it' s like the late 1970' s and early 1980' s with the boom in the united states. activism is one step removed from the takeover boom. instead of bidding for the whole company, you go in . you don' t go in because you want to lose money.

you go in because you want to make money for shareholders. some activists deals are good because the people who shake things up have done a good job, have done their homework, and the companies need to be not complacent and treat their companies like country clubs . everybody wants the long-term to be good. there are things you can do in the short term. gary: hillary clinton has said guys like you basically going to companies, create short-term profits, you do things that are not long-term in nature, you don' t create more jobs, and you don' t make the economy stronger. your response is? james: it' s just not true. anthony: you don' t want to apologize for any of that? donald: it is a complete lack of understanding of the financial markets. you go into a company not to destroy jobs but to create jobs. if a company is three different

companies and the chairman wants to have three different airplane so he can go around wherever he wants to go, but you can save millions of dollars, that can be reinvested by breaking that company up, or giving your shareholder -- your mom and dad, wants to see it at 100. anthony: like anything, that is story. it' s the version of the story i would like to believe in. i' m sure there are other scenarios or activist moments that don' t play out as don was just describing, or maybe the intent is less about long-term value creation. donald: it doesn' t mean that every activist is a good guide. it doesn' t mean that every activist knows what he' s talking about or has done his homework or is a better manager than the guy who is there. there are good deals, and there

are bad deals. anthony:anthony: there' s an immediate cost of the company when the activist starts -- i' m not trying to play devil' s advocate. i' m saying, there' s an immediate cost. there are scenarios where a company could be held hostage. a company could be a detection to value. donald: activist means you are shaking up the company because you either want them to get rid of losing divisions, you want them to pay a dividend, because you want them to buy back shares. you are not sacrificing the health of the company. people forget , management forgets, the shareholders own the company, not hillary clinton, not marty lipton, and investor. >> you and i share that view. we had a car icon, gary and i. there are some nefarious people out there.

we are all talking about a fair discourse in the market. the markets are indecisive. there' s a ton of volatility. what are we going to say -- donald: that is a point i would like to ask mr. grasso. i had this discussion with gary a couple weeks ago. i don' t understand, number one, activism is changing dramatically now. when you' ve got ken griffith, managing 18, 20, $40 billion, the old activism where you are going after $1 billion to $5 t work. these guys are ratcheting up who they are going after, and i don' t know the long-term consequences of that. the thing that scares me the

affects the activists -- dick is going to know much more than anybody -- all this high-speed trading, etf stuff, none of it has to do with the fundamentals of the company. facebook is $86, then $72. people get worried about activists. why isn' t anybody jumping up and down about the fact that it is 15 points upcoming 15 points down because some kid from m.i.t. has an algorithm? anthony: everybody is motivated by self-interest. whether it' s the activist -- gary: mine is to make gary kaminsky look good. [laughter] donald: he has the hardest job of all. anthony: when we talk about benefiting others, that has to be a unique self-interest. my self interest is, i have to perform for my shareholders so i benefit. is what is important to me as important to you? it doesn' t mean our self

when we started talking about doing certain actions for the benefit of mom and pop, that only works if we have the same self-interest. donald: i' m asking a different question. gary: let' s let dick: -- your take on the growth of activism as it relates to all the companies that are listed? dick: just as you can' t speak of high-frequency trading as a singular, homogenized world, you can' that same way. who say, the activists is yesteryears agreeing mailer. not true. you' ve seen contests where an activist takes a significant on the board. think about that. that person -- you know the names -- he becomes a fiduciary

his role is to create value, whether it' s by disposition of crating businesses, buying back stock , however. there is a shared interest. i think the problem that we have , if we talk about the markets, the structure of the markets, we' ve got markets today that are not regulated by 2015 regulations. they are regulated by 1990 regulations. i used to say jokingly to people, who is the most 1970' s? you hear buffett. s jp but felt. that' s the acronym for junk bond upon stop front and loaded two-tiered tender offers. the battle days of the saturday night special, when he was practicing law, and they would trade sides. the lift and firm would be on one side, one deal, and the

they would scream at me one day and applaud me the next day. [laughter] i do hope you noticed the difference in 42 years per they referred to me as mr. grasso. 42 years ago, it was dick: , how are we going to do it? t have a clue. i don' t understand how a company goes to its shareholders and if it' s an act of the activist gets 48% of the vote. 48% of the stockholders of a company say, we like with the activist is suggesting. donald: if you notice, when dick: and i started in the business, something unheard of -- tia craft, everybody is voting yes for say on pay.

everybody is voting yes to get rid of any takeover measures. all of a sudden, in their own quiet way, large shareholders are becoming activists on shareholder proposals. the sec has made it easier for them to do that. >> "wall street week" will be right back. >> the u.s. is the destination for capital for now. >> there is no place else in the world to put your money. >> where does the year end up? >> and equity markets? >> in your life. >> sure. >> sign-up for the free "wall street week" newsletter where we recap each week in financial markets and dive deeper into wall street week' s most recent episode. go to wallstreetwe ek.com and sign up today. "wall street week" is sponsored in part by hightower, an unobstructed view.

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are back. gary: you launch an activist campaign against the company. what you are doing. donald: we are one of two companies in history with 8% of the company that got 100% of the s the good news. the good news is we ran all our models, and we brought in a guy named lorenzo who used to run metals inc. for leon black. it' humming machine. we got rid of the $6 billion he' s reduced debt. he' s reduced expenses. he' s ok for a couple years.

goes from $140 a ton , and you get php and other producers that can produce at the $45 level, your commodities business, there' s nothing you can do about it. well anything bad long-term happened cliffs? i don' t believe so. anthony: you have to ride out the commodity cycle. donald: i wish i knew how long that was going to take. answer my question on high-frequency trading. i get up in the morning. it' s up 260 points. literally, tuesday morning, 260, and 10 minutes later, the market was flat. that is some kid' s algorithm somewhere. nothing has happened. gary: i' m going to -- how do you

explain that? anthony talked about the fear factor that has been created. i don' t think these current situations, flash crashes, and so to a certain extent, some of easily. to the fear factor. talk about the most unloved rally despite the unbelievable performance since the depths of the financial crisis, and yet we have a retail investor base, much of which has missed out on this rally, because of the fear factor, the mistrust, and whether it' s the regulations that are so behind the times, how do you bring back that trust? we have issues with china. even the most professional investors have trouble trusting the numbers coming out of china when we are trying to interpret. gary: you asked the questions. how do we bring back the trust? dick: i think you start right at

the top with the sec leadership, with the fed' s leadership, the so-called working committee that oversees the equity markets, launching a comprehensive review to bring the rules in tandem with the practices of today. just totally out of whack. i think you start a program similar to the one that existed at the stock exchange. it can' t exist at the exchange many exchanges, but in industrywide effort to educate the public. we need broad-based regulatory reform. dick: i want to turn back to a second on the issue of activism. i would like to ask to expert sitting next to me -- should right to vote? the viewers? shareholders?

while some s sake, we are the longest of long term investors, let me just warn you. i was on the floor of the exchange the day s&p said , all non-us securities have to come out of the index. what did all of those non--- those long-term index investors do? on the last trait of the day, they sold millions and millions t own it the next day. i don' t think those people have a hoot of an interest in what management does. they are accidental. i' d love to hear your thoughts on that. james: i don' t know if this is the right connection point, but when i think about compensation committees, i think i have the right to own that stock or not on that stock. i have that control. whether i' m a big investor or small investor, i have the right to make the decision whether i' m going to own or not own, or in certainly some cases, short.

i don' t feel the need for a if i don' if i don' t believe in what they sell that stock. if i hate with their doing, i can be aggressive and short it. you believe in the management. t, you have the right to sell it. >> "wall street week" will be right back. >> i' m happily in the long-term unemployed category, and i share becomes available. >> the u.s. is the destination for capital now. >> there is no place else in the world to put your money. like us on facebook. instagram. "wall street week" is sponsored investing made better. money? whether you are a multimillion

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ve created automated invest to help people make better financial decisions and reach their goal. we make your life better by helping you manage her money, invest for your personal goals, and stay on track for retirement. the revolution of smarter, more straightforward, personalized we are leading the way. >> my name is bob alstyne. i am a value investor, and if you want to know where the values are, watch "wall street week." anthony: i want to go back to the market manipulation and the current volatility. you think that the volatility is related to manipulation of the markets? james: i don' t want to say it' s manipulation, but i believe there are a lot of technicals. i believe the algorithms and the way these dark pools work, or fright -- or high-frequency works, it exacerbates moves.

s difficult for the average investor to understand why the moves are so violent. that is the way the markets are acting today. anthony: are we in a bear market? james: i don' t believe we are in a bear market. we' ve certainly had a pullback or a correction, a not insignificant one, but when i look at the market, i believe going on in the u.s. economy. i know it' s not exciting growth. these job numbers are not wow factors, but the housing market is performing well. consumer confidence is high. i believe the u.s. economy, market, represents one of the money. anthony: what do you think? cars. we are selling homes, both single-family and a multis. the rest of the world is looking

at the united states and china. why do i say "and china"? everyone thinks china is a horror story. how would you like a 5% gdp growth rate in the united states? china has cut their growth rate from 10% to 5% in , i would say, timeframe, if beijing doesn' t like the effects goes back to 10%. they have the ability with one billion people to wield an incredible amount of, what i think in some cases is bad influence, i.e. the stock market where they tried to basically shore it up. a markets have got to be left it -- anthony: you are bullish on economic growth? dick: absolutely. donald: there is no place in the world to put your money. anthony: why? donald: david stockman who has been a bear on china, calling for huge corrections, and he has

quite a few people who agree with them -- he says the numbers out of china are untrustworthy . , it is the former head of omb, i get it. you don' t want to put your money in china or in hong kong. anthony: the u.s. is the destination for capital. donald: where are you going to go? you can' t go to london. the prices are crazy preview don' t know what draghi is going to do. you don' t know what angela merkel is going to have to do. anthony: has the fed done the right thing keeping interest rates at zero for as long as they have? what do you think investors should be thinking about the fed when this cycle ends, how they should be -- they should be thinking about monetary policy? dick: i think the fed did a masterful job in the 2007-2010 period.

the country was teetering. there' s no question the markets were in financial disarray. gary: did you talk to bernanke during that time? dick: no. i' m happily in that long-term unemployed category, and i intend to stay there until that chair becomes available. [laughter] i think the last few years they have waited too long to resume a pattern of higher interest rates. when people hear higher interest rates, they go into catatonic shock. we are not talking about going back to a 15% treasury long bond. we are talking about going from zero to come in a worse case, 1%. wouldn' t you have love to borrow, buy a house when the rates were at 1%? i think it' s silly. donald: they also assume -- assume that if we get to 1%, the yield curve is going to stephen.

i have many people who have said the yield curve will possibly flatten. what is your outlook in terms of interest rates? james: i know it doesn' t make good tv to say ditto, but i do agree. for those people who are fed bashers, and i' m not among them, i do think they underestimate or don' t realize just how close to the brink we were but for the fed truly stepping in. do you want to call them helicopter fed? the fed didn' t just save the u.s. economy. saved the global economy. i think they' ve stayed too long. gary: we' ve got many viewers out here on bonds, not trading in bonds, but investing in bonds. do they need to be worried? donald: i know people putting their money in 10-year treasuries -- if i told you i was going to be paying you to dollars $.11 for a treasury 10 years ago, you would have looked at me like i was out of my mind.

>> "wall street week" will be right back. >> sign-up for the free "wall street week" newsletter where we recap financial markets and dive deeper into the most recent episode with featured articles and investment primers. go to wallstreetweek.com or sign-up today. >> "wall street week " is sponsored in part by coke industries. we are koch. >> two thirds of our planet is covered in it. why do nearly 800 million people suffer from lack of clean water around the world? that is completely unacceptable to me. that is why i' m working on a way to solve this global problem, like here in sa o paulo, brazil, by taking the polluted water we have an providing technology to filter it back into clean water. my name is manny, senior vp of technology. we are koch. >> you can join millions of americans turning off the old

media for newsmax tv. we are in over 40 million homes on directv channel 349 and verizon fires channel 115. plus, you can watch us anywhere in the world. download our free app from your iphone or android. do it today, and find out why millions are tuning in to newsmax tv, for real news, better talk. >> "wall street week" is sponsored in part by morgan stanley, where capital creates change. anthony: let' s start with you, jim. where does the year end up? james: in the equity markets. anthony: in the equity markets. your life. [laughter] james: i actually think the equity markets are going to move a little bit higher. the volatility is here to stay. china is going to contribute to that. one of the risks his credit. credit, if for some reason

credit gets pulled, that' s a little different. i know mutual funds are lacking in cash. if there were some redemptions, you could see some selling. we believe the equity markets move higher. anthony: donald, what do you think? donald: january 1, i predicted 18,800 for the dow. i' m sticking with it. dick: i will go to the s&p and say it' s at or slightly above 2000. anthony: what do you think? gary: the good thing is, i have to basically listen, and i' m not going to make a prediction. honestly, i don' t know. i think what has happened the last couple weeks and towards the end of the summer has created an atmosphere where i think we are going to have to sit back and watch what happens around the world. as much as we pointed out on this program that the u.s. is in good shape, unfortunately, the way the investment world is today, while it may not impact things long-term, it' s going to impact day-to-day.

record for dick' s wife that he said, i don' t know. we want to thank our guests for spending time with us on "wall street week." you can check in with us all week at wallstreetweek.com. until next sunday, have a

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them a lesson.