INTO A GIANT CROSS FOR
CHRISTMAS.
THOSE STORIES COMING UP.
TOP STORY THIS HALF-HOUR,
MARKETS ARE LOWER, WE EXPECT A
FRACTIONAL DECLINE AT THE START
OF TRADING, DOWN THE THRILLS
DOWN 76 POINTS, A THIRD OF 1%,
THE NASDAQ DOWN 20% FOR THE
HIGHS, THE NASDAQ CLOSED 19%
LOWER THAN ITS RECENT CLOSING
HIGH IN AUGUST AS YOU SEE FROM
THAT CHART, TECHNOLOGY STOCKS
TOOK A HIT, AMAZON LOST 8% AND
FACEBOOK DOWN 7.5%.
JOINING US IS MAHONEY ASSET
MANAGEMENT CEO KEN MAHONEY.
YOUR REACTION TO WHAT IS GOING
ON WITH TECH IN PARTICULAR?
>> I DON'T THINK IT IS
OVERREACTION.
WE HAVE DON'T FIGHT THIS FED,
THIS FED USING 1965 TEXTBOOKS
TO TELL US YOU HAVE LOW
UNEMPLOYMENT, WAGE INCREASES,
TOO FEW GOODS AND A BUNCH OF
REASONS WE SHOULD NOT BE
RAISING RATES IN 2019 FROM
BREXIT TO THE OVERHANG WITH
MUELLER AND ALL THE PROBLEMS WE
HAVE.
MARIA: THEN WHY HIKE INTEREST
RATES?
>> THE FED RAISES RATES TO
BREAK SOMETHING AND THEY ARE
BREAKING SOMETHING ALREADY.
I FEEL IT IS INDEPENDENT, WE
ARE INDEPENDENT BUT THEY DON'T
REALIZE THE WEALTH EFFECT THAT
HAPPENS WHEN INVESTORS LOOK FOR
A GAIN.
THEY SEE THEIR ASSETS GO DOWN
AND REACT.
THEY MAY NOT DO HOME
IMPROVEMENT.
>> THERE WAS TALK OF THAT IS
CREATING A BUBBLE AND ASSET
PRICES GO UP, THE STOCK MARKET
GOES UP.
THAT IS OFF THE TABLE.
FOR INVESTORS WHO HAVE LOST
MONEY IN THEIR PORTFOLIOS IT IS
IMPORTANT TO SPEAK TO THEM AND
FOR THEM TO UNDERSTAND THIS
DOESN'T MEAN YOU RUN FOR THE
HILLS OR HAVE TO SELL.
IF YOU HAVE COMPANIES LIKE
APPLE THAT HAVE GONE FROM 230
TO 160 YOU COULD LOOK AT THAT
AND LOOK PAST THE FED AND LOOK
FOR OPPORTUNITY BASED ON THE
FUNDAMENTALS OF THE UNDERLYING
COMPANIES.
>> THE DOWNDRAFT CREATED A LOT
OF OPPORTUNITIES WHICH IS WHY
WE HAVE THE MARKET, SOME PEOPLE
ARE BUYING TO YOUR POINT.
A 10 YEAR HORIZON, THIS TOO
SHALL PASS BUT SHORT-TERM WE
ARE DEALING WITH A FED WHO IS
PRETTY TOUGH, PRETTY HAWKISH.
ON WEDNESDAY THE QUESTION AND
ANSWER SESSION, THEY ARE
ADVOCATING LOWER, AROUND $50
BILLION BALANCE SHEET.
OVER THE COURSE OF THE YEAR,
OVER 3 YEARS IT IS
$1.3 TRILLION OFF THE BALANCE
SHEET, THAT IS A LOT.
MARIA: IT IS TIGHTENING WHICH
IS WHY INVESTORS ARE SPOOKED
AND THE FED ON WEDNESDAY SAID
WE EXPECT TWO MORE INTEREST
RATE HIKES.
STEVE MNUCHIN WAS ON
FOXBUSINESS YESTERDAY REACTING
TO THE FED ANNOUNCEMENT AND
LOOKING AT THE MARKET'S
REACTION IN PARTICULAR.
>> I THINK THE MARKET WAS
DISAPPOINTED IN THE CHAIRMAN'S
COMMENTS BUT I WOULD SAY IF YOU
LOOK AT THE SPECIFICS YOU CAN'T
JUST LOOK AT THE HEADLINE WHICH
WAS TWO MORE RATE HIKES.
YOU HAVE TO LOOK AT THE 17 DOTS
ON THE DOT PLOT.
EACH OF THE GOVERNORS AND THE
PEOPLE ON THE COMMITTEE WITH
THEIR VIEWS IF YOU LOOK AT THE
HIGH END OF THE RANGE CAME DOWN
SIGNIFICANTLY AND THERE IS A
WIDE DISPERSION SO CLEARLY
PEOPLE ON THE COMMITTEE THINK
THEY DON'T NEED TO RAISE RATES
MUCH HERE.
WITH THE ADVENT OF COMPUTERIZED
TRAINING WHICH HAS A BIG PART
OF THE MARKET NOW COMBINED WITH
THE VOLCKER RULE WHERE YOU
CAN'T HAVE MARKETMAKERS COMMIT
CAPITAL, YOU HAVE BIGGER MOVES
IN BOTH DIRECTIONS AND CLEARLY
A SITUATION WHERE THE MARKET
HAS OVERREACTED TO THE FED'S
COMMENTS AND USE THE PROGRAM
TRADING TAKING OVER.
US GROWTH A LOT STRONGER THAN
THE REST OF THE WORLD, US
BUSINESS ACTIVITY CONTINUING TO
SEE PICKUP.
WE THINK WE WILL SEE A LOT OF
CAPITAL INVESTMENT.
THE FED SAID YESTERDAY THEY SEE
STRONG ECONOMIC SIGNS.
MARIA: YOUR THOUGHTS?
THE ECONOMY IS STRONG.
>> WE ARE ROOTING FOR GOOD NEWS
AS INVESTORS.
NEXT TIME WE GET GOOD NEWS, JOB
REPORT COMES OUT AND THEY
CREATE MORE JOBS, WHAT IS THE
FIRST REACTION?
THREE RATE HIKES?
THIS IS THE AREA WE ARE IN AND
IS THE FED GOING TO LISTEN TO
THAT?
WE ARE IN A PICKLE HERE WITH A
DOWNWARD TREND.
I'M NOT TRYING TO BE NEGATIVE.
MARIA: ARE YOU A SELLER OR DO
YOU WANT TO BUY STOCKS?
>> YOU CAN'T BE SELLING HERE
ESPECIALLY ON THE LONG-TERM
HORIZON, AVERAGING IN,
AVERAGING IN, AVERAGING IN,
HERE'S THE SIGN THAT WE ARE
GETTING CLOSE TO THE BOTTOM.
YOU SEE NET LIQUIDATIONS, $40
BILLION A WEEK COMING OUT OF
FUNDSS.
WE ARE SETTING RECORDS, MOST
INVESTORS BUY HIGH AND SELL
LOW, WE HAVE INFLUENCE OF TENS
OF BILLIONS AND NOW OUTFLOWS,
THEY LOOK AT THE MOMENT LIKE A