ASHLEY: THE DOW AND S&P
CONTINUING A RUN INTO RECORD
TERRITORY AS PRESIDENT TRUMP
TOUTS THE BUS U.S. ECONOMY EVER.
JOINING ME MOODY'S CHIEF
ECONOMIST JOHN LONSKI AND FROM
VISION FOUR FUNDS DISTRIBUTORS,
HEATHER ZUMARRIAGA.
THANK YOU BOTH FOR BEING HERE.
JOHN, LET ME BEGIN WITH YOU, THE
QUESTION IS ALWAYS HOW LONG CAN
THIS BULL RUN GO?
I HAD A NUMBER OF ANALYSTS SAY
RECENTLY WE'RE IN ABOUT THE
SEVENTH INNING, WOULD YOU AGREE
WITH THAT?
>> I DOESN'T KNOW WHAT THAT
MEANS, THE SEVENTH INNING.
ASHLEY: SUGGESTION WE'RE 2/3 OF
THE WAY THROUGH IT I GUESS.
>> AS LONG AS OUTLOOK FOR
PROFITS, PRICES CLIMB HIGHER.
I DON'T THINK THE IT WILL BE
DERAILED BY HIGHER INTEREST
RATES.
RIGHT NOW THAT IS THE STILL
BIGGEST DANGER.
THAT DANGER WILL BE WELL
CONTAINED AS WE HAVE INFLATION
EXPECTATIONS STUCK AT 2%.
ASHLEY: YO KNOW IF THAT IS
POSSIBLE.
HEATHER ARE WE IN THE 7th
INNING OR 4th INNING, I
DON'T KNOW IF YOU LIKE THE
BASEBALL ANALOGIES, WHAT DO YOU
IF WE GET TRADE DISPUTES
RESOLVED BETWEEN NAFTA, CHINA
AND THE U.S. SEEMS LIKE THE
MARKETS ARE GETTING USED TO
TRADE TENSIONS.
THE FEDERAL RESERVE SET TO HIKE
RATES NEXT WEEK.
DESPITE ALL OF THIS MARKETS ARE
STILL SETTING NEW RECORDS.
PRESIDENT TRUMP SAYING THAT THE
U.S. ECONOMY IS BOOMING.
PERHAPS IF WE GET SOME TRADE
DISPUTES RESOLVED, MAYBE WE'RE
IN THE FIRST INNING.
ASHLEY: WOULDN'T THAT BE
SOMETHING?
JOHN, WHAT ABOUT THAT?
TRADE TENSIONS ARE SHRUGGED OFF
BY THESE MARKETS.
IF IN FACT WE GET DEALS WITH
MEXICO, CANADA, THE BIGGIE,
CHINA, IF WE GET THAT ALL DONE,
ARE WE UP ANOTHER LEG OR TWO?
MARKET COULD CARE LESS ABOUT
IMPLEMENTATION OF TARIFFS IN
CHINA.
10% TARIFF.
>> PROFIT MARGINS SUCK IT IN A
LITTLE BIT OR --
ASHLEY: CONSUMERS COULD END UP
WITH --
>> CAN THE CONSUMER AFFORD TO
PAY MUCH WHO ARE?
WE HAD PROBLEMS WITH AUTO SALES
AND HOME SALES BECAUSE AUTOS AND
HOUSING TEND TO BE OVERPRICED AT
>> YES.
>> WHEN THE FED TALKS ABOUT WELL
CONTAINED INFLATION EXPECTATIONS
WHAT THE FED IS TELLING YOU THE
CONSUMER IS NOT AN IDIOT.
IF THE COMPANIES RAISE PRICES
MORE THAN TWO OR 3%.
WHAT DOES THE CONSUMER DO?
THEY JUST DON'T BUY.
ASHLEY: THAT IS A GREAT POINT.
>> DISCIPLINING.
ASHLEY: GO AHEAD, HEATHER.
>> LOOK AT WALMART CUSTOMERS MAY
ENDURE HIGHER PRICES.
WALMART CEO SAYING THEY MAY HAVE
TO HIKE PRICES FROM GOODS, FOOD
AND BEVERAGE DOWN TO BICYCLES TO
CONSUMER ELECTRONICS ACROSS THE
IMPACTS OF TARIFFS ON RISING
PRICES, THREAT OF INFLATION JUST
SO YOU KNOW, TUG-OF-WAR.
YOU HAVE WALMART SAYING PRICES
WILL GO UP.
GOLDMAN SACHS SAYING YEAH THEY
WILL GO UP BUT NOT THAT MUCH.
WILL IT REALLY HAVE THE BIG
IMPACT ON CONSUME IS AND
SPENDING THIS HOLIDAY SEASON.
ASHLEY: GETTING BACK TO THE
MARKETS, JOHN, WHAT COULD REALLY
KNOCK THIS OFF?
IF FED GETS OVERENTHUSIASTIC
RAISING RATES TOO QUICKLY?
THAT SEEMS NOT TO BE CASE.
CONCEIVABLY IT IS OVER WHEN IT
IS OVER?
>> THE ONLY THING WOULD KNOCK
THE MARKET DOWN THAT WE SUDDENLY
FOUND OUT WE GROSSLY
OVERESTIMATED EARNINGS GROWTH.
WE BECOME NERVOUS ABOUT A
POSSIBLE CONTRACTION OF
EARNINGS.
I DON'T SEE THAT HAPPENING
ANYTIME SOON.
ULTIMATELY THE GROWTH OF PROFITS
THAT DETERMINE THE RETURN FROM
EQUITIES AND PROFITS ARE
EXPECTED TO GROW THIS YEAR, NOT
ONLY NEXT YEAR, BUT INTO 2020,
ACCORDING TO THE CONSENSUS, THEY
HAVE OPERATING INCOME, S&P 500
UP BY 10% IN 2020.
BUT ONE WARNING, THERE ARE
GROWING NUMBER OF ECONOMISTS TO
TALK ABOUT A POSSIBLE RECESSION
BUT YOU CAN'T HAVE A RECESSION
WITHOUT A SHRINKAGE OF --
ASHLEY: YOU KNOW WHAT, HEATHER,
CHARLES PAYNE SAID THIS EARLIER
TODAY, THIS IS THE MOST HATED
BULL RUN IN HISTORY.
NO ONE LIKES IT.
BEEN GOING ON SINCE 2009.
HE SAYS HE LOVES THAT WHICH
SPEAKS TO MAYBE THERE IS STILL A
LOT OF MONEY ON THE SIDELINE
COULD COME IN.
>> MARKETS CLIMB A WALL OF WORRY
SO THE FACT THAT THERE ARE STILL
PEOPLE ON THE SIDELINES WAITING
KEEP GOING HIGHER.
I THINK PEOPLE ARE ON THE
SIDELINES SAYING OH, WE'RE
MISSING OUT, DESPITE TRADE
TENSIONS AND RISING INTEREST
RATES.
AND THAT IS WHY WE KEEP HEADING
HIGHER ALONG WITH STRONG U.S.
GROWTH.
AND AROUND EMERGING MARKETS
DOING WELL BECAUSE THE DOLLAR IS
WEAKENING.
SO THAT IS HELPING THEM.
NEIL: --