this idea that because we are buying a lot of cars, we are overleveraged, i don't think is correct.look at the nominal sure , whetheres consumption in gdp -- alix: we actually do have that chart. steven: we are basically at recession level. consumers are able to spend the money on other items. alix: something i feel it isn't so strong in the economy that everyone points to is the job market. what is the correlation between the volatility that we see and how does it might've trickling through to the job market? at some point you can say, hey, i don't want to hire anyone because i don't know what will wind up happening. this is risk factor, the yellow line, versus employment growth. steven: that is kind of a rorschach test. i don't see much correlation. alix: both going up. steven: well, both going up but not really one to one with each other. also, one is financial risk and the other is implement growth, which is a good thing. -- when is financial risk, which is a bad thing, and the other is employment growth, which is a good thing. tighter financial conditions causing employment gro

that helped them overcome that where energy stocks are overleveraged and underpressure. the dividend is something we could also point to because at the time, treasuries are yielding much lower numbers and while we waited for this turn around to take place, it was a reasonable proposition. >> are you worried about the dividend near term? there are some companies cutting it and mcdonald's has not been on the list because the stock has been doing well. >> the stock is doing well. they can cover the dividend payment. it's somet steve has announced he will not cut back. when they say they want to give shares or money back to shareholders, we view that as a positive thing. >> all right. thanks for spending time with us. >> thank you. >> as the market slides, and we're currently in correct territory, there's a strategy called buy the dibs. it's looking for bargains in the stock bins. it's not a strategy that just the pros can take advantage of. >> picking tops and bottoms in the stock market is no easy task and you'd be hard pressed to find anyone who can do it with consistency

worried about eight years ago came from house prices, now from the energy complex, people get overleverageddrive asset prices up, the liability is still there, then you get the debt deflation. going up,lk about oil plunging, supply out of russia and the united states and the inability of opec to get its act together -- these are all smokescreens? >> no, they are the consequence the place through. the original definition for the natural rate of interest 100 years ago is the rate of interest which tends neither to increase or decrease the price of commodities. how is that working out for you from 2003 to last year? the u.s. said there's this new technology, they ability to get oil that was economical before. you think it's more about the availability of capital? >> why do we price oil where it is? i understand the supply-demand dynamic, but the cost of money in the energy patch certainly help that infrastructure is why thosehich energy companies are at risk of going bankrupt, they brought more than expected revenue from oil. alix: we haven't seen those bankruptcies, even though we have not se

overleveraged, overcapacity and an aging population. it will take many years, so i think the u.s.nd the world is going to have to get used to lower rates of chinese growth and i think the world is adjusting. it has implications for commodity prices and it will have some implications for u.s. gdp. companiese world and and the markets are trying to digest all of that. >> robert kaplan was very well known at goldman sachs and harvard, but as a policy maker, they don't know where you are coming rob. would you characterize yourself as a hawk or a dove? >> probably as a centrist. what i mean is time quite open -- i quite open -- i am quite open to looking at new information. i don't rate unemployment versus inflation. i don't come in with a preconceived point of view as a hawk or a dove, i probably more focused on diagnosing what to do and how to do it. i would call myself a centrist and i think you will see me at times advocate positions that sound hawkish and at times giving in on the facts on what my analysis is an advocate positions that seem dovish. betty: that is a centrist. looki

it will take years to do with overcapacity in their industries, overleveraged, aging population, and this transition they are trying to make from an export driven economy to a service sector consumer economy. that will take many years. i think the u.s. and world will have to get used to lower rates of chinese growth, and i think the world is adjusting to that, but that has implications for commodity prices. ,ome implications for u.s. gdp definite implications for u.s. domiciled companies trying to do business around the world. theworld and companies and markets are trying to digest all that. well robert kaplan was known at goldman sachs and harvard, but as a policy maker, people don't know where you are necessarily coming from. would you characterize yourself as a hawk or a dove? >> i would probably consider myself, as a business person, a centrist. what do i mean by centrist? tomeans i am quite open looking at new information and changing my mind. i do not rate unemployment the risks ofion -- those and the importance of those are equal. but i do not come in with a preconceived point

they are not overleveraged and their asset position.re any broad market asset bubbles today? the answer is absolutely not. there was so much shakedown and worry in the commodities space. to one of the issues, which is the fed, the fed thinks you'll see four rate hikes this year. the fact that we will see things that 1.375% this year, the market says you are going to get -- >> i am pretty much with the market on this. we do not have any significant asset bubbles. the s&p is rich, but it is not stretched. there are a number of drags on growth, notably the strong dollar, the energy sector. it is very difficult to paint a scenario whereby american growth accelerates much above 2.5%. inflation creeping up, but it will be a slow process. headline inflation today, zero. possibly moving ahead to 1.5% by the end of the year. in that environment, the fed will move very slowly indeed. where are we going to be at the end of 2016? i would be very surprised if we see an acceleration in monetary timing. anna: how much do you buy into that transatlanti

we need more public-sector investment, lots of countries have gotten themselves overleveraged.hey say they cannot do that now. got private sector investment, below the optimal level. there are lots of things that need to happen that are going to take some forceful policy intervention, and in some cases, creativity. david: when it comes to china, and obviously that will be a hot topic of conversation, what is your assessment on how they are handling the transition? that seems to be, for whatever reason, suddenly getting a lot of people worried. it has been there for over 10 years now. i think by and large, the chinese are handling the transition quite well. it's not complete. there are some important decisions to make about state innovation,rises, about a lot of things. there is a fair amount of work to do on the financial sector as well. but i think what you are seeing is sort of a lack of information outside of china, so people who are close to china think the transition is going pretty well. outside people think maybe it is collapsing, or the markets are going to go crazy. so

energy companies that were overleveraged. i think the solution will be a painful deleveraging. the question is if they are more accommodative, will that usease it. i think the equity market will rally, volatility will fall, high-yield spreads will tighten, and that would affect markets globally. we can see the same thing in europe. they followed u.s. spreads wider, and fundamentally europe shouldn't have sold off. investment grade credit shouldn't have sold off. the fundamentals were better, the oil exposure was in there. that is the market where we see a lot of upside. also in europe, if we see the earnings come through, we see 30% upside in europe for the stoxx 600, but only 20% upside to our target for the s&p. risk rally, obviously, even if credit conditions would be best for the high-yield market, and obviously that would give us a breather and correlation between energy and equity markets, which is a healthy thing. jonathan: thank you very much. european high-yield next price. we will be talking much more as we work our way through the problem. still to come, an exclusive

in terms of the overleveraged as you look the further down, the higher the probability of default. last year we saw 30 companies. those companies defaulted. we will see that number increased this year quite dramatically. barrel level of $29 a gives potential. alix: what has helped in the last year has been the cost of these companies. some of these have been pushed out. scarlet: they have been very efficient at cutting their cost. is what didn't happen last fall or spring, it was anticipated. a lot of companies had hedge positions and the crudity positions that help them through this area. we did see a lot of exchanges where companies are exchanging notes for second grade notes. has to reduce debt and to some extent, those debt service costs -- they do get a better position with the capital structure. but those companies are trying to ride time. that is an environment that we don't see coming in the near future. there isyou feel like one company in investment grade space that could trigger some kind of panic? if they were to slip enough to cause the unwinding of the energy space? t

because what happened in 2007 is we had this amassing of debt and overleveraging and the creation of ponzi scheme. today, we have to insist on more discipline with monetary policy, and the monetary policy of the fed right now encourages expansion of debt, that's not good for the country and the economy. neil: that is very well put, dennis kucinich, very good having you. >> thank you. neil: he is honest as day is long, he doesn't waffle his position, he has stated his case and consistent on that no matter who it pisses off. stay with us, we have a sell-off of 450 points. you are watching fox business. .... we live in a pick and choose world. choose, choose, choose. but at bedtime? ...why settle for this? enter sleep number, and the lowest prices of the season. sleepiq technology tells you how well you slept and what adjustments you can make. you like the bed soft. he's more hardcore. so your sleep goes from good to great to wow! save $1100 on the i8 mattress with purchase of sleepiq technology and flexfit3 adjustable base. ends monday. know better sleep with sleep number. neil: down f

overcapacity in their industries come overleveraged, aging population.tion they are trying to make from export driven economy to a service sector consumer economy is going to take many years. i think the u.s. and the world is going to have to get used to lower rates of chinese growth and i think the world is adjusting. it has implications for commodities prices are you some applications for u.s. gdp. it hasn't locations for u.s. domicile -- it has implications for u.s. domicile of companies. michael: robert kaplan was well known at goldman sachs and harvard but as a policymaker people do not know where you are necessarily coming from. would you characterize yourself as a hawk or dove? robert: it may be too soon to say. i probably consider myself as a business person as a centrist. open to i am quite looking at new information and changing my mind. i don't rate unemployment versus inflation. i rate the risks of those in importance of those about equally but i do not come in with a preconceived point of view as a hawk or dove. i'm probably a person who is

someeal risk is not overleveraged financial crisis with regulatory arbitrage is like we had in 2008.t is 90% probability we are in -- thenst-september we go back up. there's a little probability on a much deeper emerging-market that feeds back and keeps the fed on hold for the whole year. david: it may have been an experiment, but it's had to effects. -- two if expert it has the leverage household and corporations. - it has had two effects. it has left the fiscal people in congress -- >> fiscal policy has been underused in europe, underused in japan. ofer the first several years crisis with it was used quite successfully to bring about a rapid turn, fiscal policy has been underused as a resource in the united states. david: is this something of a bright spot? something we haven't tried yet that we can try? david: i don't think have ever seen mary summers talk negatively about fiscal policy in his life. -- larry summers. he loves fiscal policy. i'm a big believer in monetary. i don't necessarily believe you can go back in the history books and find that many great fiscal experiments c

emerging-market crisis, it's always the dollar denomination aspect and it's the fact that people of overleveragedhe world is going to continue convincing themselves that this time it's different. stephanie: how did this happen with this -- this time it's different? the developed world is not corrected the mistakes they made in the past. what joke to the emerging markets miss? jimena: emerging marketsjimena: were thinking that conditions are very strong, growth would continue. i think a lot of firms and governments were perhaps not brilliant enough. they assumed the growth has gone crisis before 2008, 2009 to 4% in 2015. that's a big line. that in a lothows of ratios like emerging markets, corporate debt to gdp ratios that went from less than 50% over 70% in emerging markets. even sovereigns, although they have behaved a little better than emerging corporate. david: this is lumping all emerging-market companies together. is there a variation of leverage from company -- from country to country? mark: i did look at china, china has more leverage. if emerging markets on average have about $.90 of deb