MARIA: WELCOME BACK I AM
COMING LIVE THIS MORNING FROM
MILLIKEN GLOBAL CONFERENCE IN
LOS ANGELES, MARKETS ON A
RECORD RUN IN RECENT YEARS,
COULD WALL STREET BE ON A
COLLISION COURSE WITH DISASTER
WHAT NEXT GUEST SAYS
GUGGENHEIM PARTNER SCOTT.
>> GOOD TO SEE YOU --
>> DRAMATIC OF YOU YOU THINK
ON A BUMPY ROAD SORT OF A
SESSION.
>> I THINK, I HAVE TO MAKE --
EXCITING SO YOU CAN READ IT.
BUT I THINK WE ARE, GIVEN
FISCAL POLICY HIGHLY STIMULUS
NATURE A LIFT NEXT 24 MONTHS.
>> PAST FULL EMPLOYMENT WAGES
WRITES CORE CP.E. ABOVE 2% FED
TARGET NUMBER, SO THE FED IS
GOING TO CONTINUE INCREASING
RATES, TO FULFILL MANDATE
EVENTUALLY, TWO YEARS FROM NOW
STIMULUS IS WEARING OFF, THE
-- GROWTH NUMBERS ARE STARTING
TO FLATTEN OUT WE ARE GOING TO
FIND OURSELVES WITH
RESTRICTIVE MONETARY POLICY
ABOUT INEVITABLY THE
COLLISION.
>> WHAT I ASKED MNUCHIN LAST
NIGHT TREASURY SECRETARY
TOPICED ABOUT DALLAS FED
PRESIDENT KAPLAN SAID BY END
OF 2019 THE END OF THE YEAR HE
THINKS WE ARE GOING TO SEE
GROWTH -- 1 3/4% BACK DOWN
FROM CLOSE TO 3% HE SAID THERE
IS A LOT OF RUNWAY, FOR THE
TAX CUT PLAN WE ARE GOING TO
CONTINUE TO SEE, THAT IMPACT
THE ECONOMY.
>> LOOK THE WHOLE THEORY THERE
THAT IS AFTER WE GET PAST THE
INITIAL STIMULUS OF THE TAX
CUTS, AND THE LIFT THAT IT I
SUPPOSEDLY GOING TO GIVE TO
CONSUMING WE WERE TALKING
HASN'T BEEN PROVEN YET, BUT
THE -- THE REALITY IS THAT THE
LONGER TERM IMPACT OF THE TAX
CUT WILL ENHANCE PRODUCTIVITY
FROM EXPENDING LOWER TAX RATES
FOR CORPORATIONS TAKES A LONG
TIME TO BUILD UP IN THE
SYSTEM, TRADITIONAL THAT SORT
OF COMPACT HAS NOT HIT THE
ECONOMY UNTIL FIVE YEARS AFTER
THE TAX CHANGE, SO I THINK,
THE SECRETARY MNUCHIN IS
PROBABLY ABOUT CORRECT IN
RAISE POTENTIAL OUTPUT FOR THE
ECONOMY BUT RAISE POTENTIAL
OVER LONG HAUL, AND SHORT RUN
I THINK YOU KNOW, PRESIDENT
CAP KAPLAN CLOSER TO REALITY A
SLOWDOWN AROUND 2020.
>> YOU THINK BEGINNING OF A HE
RECESSION.
>> I THINK SO SO FEDERAL
RESERVE IS GOING TO BE FOCUSED
ON MANDATE REMEMBER, THEY ARE
HERE TO REACH FULL EMPLOYMENT
AND TO AASSURE PRICE STALEMATE
ALREADY FULFILLED FULL
EMPLOYMENT THE PRICE TAKING
OFF WAGES TAKING OFF FEELING
PRESSURE TO KEEP RAISING RATES
NEXT TWO YEARS.
>> THIS YEAR HOW ARE YOU
INVESTING THIS YEAR GIVEN THE
FACT YOU ARE POSITIVE ON
BACKDROP THIS YEAR.
>> HOW DO YOU ALLOCATE
CAPITAL.
>> THE DATA SHOWS THAT IN
HISTORY, THE TWO YEARS BEFORE
A RECESSION IS EXCEPTIONALLY
GOOD FOR STOCKS I THINK WE ARE
GO GETTING A RECESSION IN 2020
SO THIS YEAR SHOULD BE VERY
GOOD FOR STOCKS ESPECIALLY
EMERGING MARKETS I THINK THAT
THEY ARE GOING TO BENEFIT FROM
ALL THE CAPITAL SPENDING GOING
ON IN UNITED STATES, SO THAT
IS A GREAT PLACE TO BE.
AS FAR AS BONDS ARE CONCERNED,
WE ARE STAYING AWAY FROM
CREDIT RISK, WHEN YOU LOOK AT
JUNK BONDS, CORPORATE BONDS,
CREDIT SPREADS ARE AT ABOUT
HISTORICAL HEIGHT IF YOU ARE
HAVING A FIXED INCOME
INVESTMENT SHOULD BE HIGH
QUALITY.
>> YOU SAY RATIONALE
INTEGRATION DEPORTATION FOR
21ST CENTURY WHAT DO YOU MEAN
BY THAT PRESIDENT CRACKING
DOWN ON ILLEGAL IMMIGRATION
INTO U.S.
>> I DO NOT FAVOR JUST
THROWING THE DOORS OPEN AND
ALLOWING HE EVERYBODY TO COME
INTO THE COUNTRY.
MARIA: RIGHT.
>> BUT WHEN YOU LOOK AT AN
ECONOMY LIKE AUSTRALIA IN 26th
YEAR EXPANSION YOU SAY HOW DID
ECONOMY AVOID RECESSION
BECAUSE AUSTRALIA BUILT A
POLICY THAT ALLOWED LABOR TO
GROW AT A RATE THAT WAS FAST
ENOUGH TO KEEP FROM HAVING
OVERHEATING IN WAGES AND
PRICES.
SO THEY HAVE DEVELOPED A VERY
RATIONAL IMMIGRATION POLICY
COUNTRY THAT HAVE THE SKILL
THEY NEED TO CONTINUE TO BUILD
THE ECONOMY.
IF YOU LOOK AT THE UNITED
STATES, RIGHT NOW, WE ARE
RUNNING OUT OF LABOR, IN THE
HOUSING SECTOR A CHRONIC
SHORTAGE AMONG FRAMEERS
DRYWALLERS PAINTERS STARTING
TO SEE WAGE PRESSURE IN THAT
SECTOR.
THESE SORT OF SKILLED WORKERS
WE NEED A LOT HAVE TO KEEP THE
EXPANSION GOING.
AND ONE THING I KEEP REMINDING
PEOPLE IS WHEN YOU LOOK AT
GENERATION OUT YOU SEE WHERE
AMERICA IS RELATIVE TO CHINA
AT 2040, 2050 CHINESE ECONOMY
WILL BE ROUGHLY THREE TIMES
SIZE OF THE UNITED STATES.
MARIA: YEP.
>> THAT MEANS THEY SPEND 3% ON
DEFENSE, WE WILL HAVE TO SPEND
9% ON DEFENSE TO HAVE PARITY
WITH THEM ONLY WAY OUT GROW
PRODUCTION LABOR IS PROBABLY
THE PLACE MOST CHRONICALLY
SHORT.
>> YOU MAKE A LOT OF IMPORTANT
POINTS, THERE IS LABOR ISSUES
IS SOMETHING THAT A LOT OF
PEOPLE ARE BRINGING UP I THINK
MORE AND MORE PEOPLE ARE
UNDERSTANDING, THE ISSUES
AROUND THIS LACK OF WORKERS
WHAT IT WILL MEAN FOR BROADER