DOW INDUSTRIALS UP 114
POINTS.
THE S&P AND NASDAQ ARE MIXED
RIGHT NOW.
BY NEGATIVE BY TWO POINTS.
JOINING US RIGHT NOW, THE DEAN
OF THE BUSINESS SCHOOL AND
FORMER CHAIR OF ECONOMIC
ADVISERS.
THANK YOU FOR JOINING US.
>> THANK YOU.
>> GETTING THIS FINANCIAL
FOURTH QUARTER OF THE GDP 2.9%
GROWTH.
YOUR THOUGHTS WHERE WE ARE IN
THE ECONOMY RIGHT NOW.
>> WELL, IT'S A NUMBER I WAS
EXPECTING.
IT'S A NUMBER BETWEEN 2.9 AND
3%.
I THINK THE ECONOMY WAS GOING
INTO THIS YEAR VERY STRONG.
MAINTAINING IT WILL DEPEND ON
THE AFFECTS OF A TAX BILL, OF
A CONTINUED RESET ABOUT
EXPECTATIONS FOR GROWTH.
BUT I THINK IT'S A VERY GOOD
NEWS NUMBER.
>> GLENN, ONE OF THE
INTERESTING THINGS I LOOK AT
IS THE DURABLE GOODS REPORT,
AND THEY'VE BEAT MY
EXPECTATIONS NOT ONLY FOR
NONDEFENSE SPENDING.
SO WHAT ARE THE REPORTS YOU'RE
LOOKING AT AND WHAT ARE THE
REPORTS FOR THIS YEAR?
BECAUSE ON FRIDAY THEY WERE
GANGBUSTERS.
THAT'S LEADING ME WE'RE GOING
TO GET ABOVE 3% MAYBE 3.5%.
WHAT DO YOU SEE FOR THE FIRST
QUARTER OF THIS YEAR.
>> WELL, I THINK GOOD NEWS IS
CAPITAL SPENDING IS UP.
THAT'S PROMISING.
THE WEAKNESS ON THE RECOVERY
GOING IN.
SO I THINK THAT'S ALL GOOD
NEWS.
I THINK IT WOULD BE HARD TO
MANAGE THE ECONOMY GROWING 3%
PLUS CONSISTENTLY.
BUT BEING IN THAT RANGE
DOESN'T STRIKE ME AS ODD AT
ALL.
>> GLENN MARRY, THIS TRUMP
ADMINISTRATION CAME INTO
OFFICE JUST AS THE BUSINESS
CYCLE WAS NEARING ITS END.
TAX CUTS SEEM TO GIVE THE
ECONOMY A BOOST BUT NOW
THERE'S A LOT OF CONCERN ON
THE TRADE FRONT. HOW DO YOU
SEE THAT IMPACTING GROWTH
GOING FORWARD?
>> WELL, I THINK A BIG IMPACT
RIGHT NOW, MARY, IS
UNCERTAINTY.
THE ACTUAL MEASURES TAKEN THUS
FAR LIKE THE STEEL OR ALUMINUM
TARIFFS WHILE THEY'RE NOT GOOD
PUBLIC POLICY HAVE BEEN FAIRLY
MODEST.
THE CHINA ACADEMIES AS WELL.
SO I THINK WHAT BUSINESS
PEOPLE ARE WAITING FOR IS IS
THIS A GAME CHANGER OR IS THIS
MORE RHETORIC?
ON THE OTHER SIDE, THEIR
RENEGOTIATION ON THE U.S.
KOREA AGREEMENT LOOKS PRETTY
POSITIVE.
>> GLENN, IT'S DAGEN MCDOW, WE
SAW THE TEN-YEAR TREASURY
CLOSE ABOVE 2.8%.
I DON'T THINK IT HAS BEEN THAT
LOW SINCE FEBRUARY.
THE RATE THAT RATES PAY TO
LEND TO ONE ANOTHER THE LONDON
INNER BANK OFFERED GREAT.
IT'S AT ITS HIGHEST LEVEL IN
AND, AGAIN, THIS RATE IS USED
TO DETERMINE WHAT THE RATE
PAID ON ABOUT $200 TRILLION IN
LOANS GLOBALLY.
HOW MUCH OF A HEADWIND IS THAT
FOR ECONOMIC GROWTH,
PARTICULARLY HERE IN THE
UNITED STATES?
>> WELL, IT'S DEFINITELY A
HEADWIND.
BUT I THINK WE HAVE TO STEP
BACK AND ASK WHY AREN'T RATES
RISING?
WE'RE RISING BECAUSE OF A
BETTER GROWTH ENVIRONMENT.
WE'RE RISING BECAUSE WE'RE
GETTING BACK CLOSER TO WHERE
THE FED WANTS TO BE.
SO I DON'T VIEW IT AS A BAD
STORY AS LONG AS ALL OF THIS
IS GRADUAL.
AS LONG AS GROWTH IS THERE,
WE'RE FINE.
>> WHERE IS GROWTH?
WE'RE JUST TWO WEEKS AWAY FOR
THE FIRST QUARTER.
WHERE SPECIFICALLY DO YOU SEE
THE MOST GROWTH RIGHT NOW IN
THIS ECONOMY?
>> WELL, I THINK WE ARE SEEING
A REBOUNDING CAPITAL SPENDING
SECTORS.
OBVIOUSLY WEAKNESS RIGHT NOW
IN THE TECHNOLOGY SECTOR.
BUT STRONG STILL IN FINANCIAL
SERVICES, IN HEALTH CARE,
GENERALLY THROUGHOUT THE
ECONOMY WITH CONSUMER
SPENDING.
SO I'M PRETTY OPTIMISTIC.
AGAIN, WHAT WOULD WORRY ME
WOULD BE POLICY UNCERTAINTY OR
GEOPOLITICAL EVENTS.
>> DON'T WE HAVE THAT?
POLICY UNCERTAINTY AND GOP --
ALSO UPSET AND UNCERTAINTY
ABOUT THE BARN STORY IN TERMS
OF NATIONAL SECURITY?
>> WELL, WE DO, AND I THINK
WHAT WE HAVE TO DO IS FOCUS ON
WHAT WE CAN CONTROL, WHICH
WOULD BE THE POLICY
UNCERTAINTY.
SO IT WOULD BE GREAT TO SEE
THE ADMINISTRATION FOCUS MORE
ON ITS LOW FREQUENCY SUCCESSES
AND LESS ON HIGH FREQUENCY
NOISE.
>> BUT HOW ARE CONSUMERS
SPENDING ALL OF THIS MONEY
AGAIN?
MARY AGAIN FROM THE
WALL STREET GENERAL.
ARE THEY TAKING OUT DEBT,
PUTTING THIS ON CREDIT CARDS,
OR ARE THEY TAKING IT OUT OF
SAVINGS?
THAT REQUIRES SOME ADJUSTMENT
GOING FORWARD.
RIGHT NOW CONSUMERS ARE MORE
OPTIMISTIC ABOUT GROWTH AND
WAGES.
IF THAT OPTIMISM PROVES
PREMATURE, OBVIOUSLY CONSUMER
SPENDING WOULD TAKE A HIT.
>> YEAH. I THINK ONE OF THE
THINGS THAT WE'RE KIND OF
TIPTOEING AROUND TOO IS THE
STRENGTH THE DOLLAR LAST
YEAR.
THE MARKET WAS UP 20% AND THE
REASONS WHY THE DOLLAR WAS
DOWN 10% IS YOU'RE SEEING THE
DOLLAR SELL OFF HERE.
IS THAT GOOD FOR THE ECONOMY
GOING FORWARD IN REGARDS TO,
HEY, WHAT'S GOING TO -- FOR
THE STOCK MARKET RIGHT NOW.
IT'S NOT GOOD NECESSARILY FOR
OUR TRADE DEFICITS AND OUR
EXPORTS.
BUT WHAT IS YOUR TAKE ON THE
DOLLAR AND HOW IT'S GOING TO
WEIGH ON THIS MARKET.
>> AND, BY THE WAY, YOU WOULD
HAVE EXPECTED THE COMPLETE
OPPOSITE; RIGHT? IF THE
ECONOMY IS GROWING THE WAY WE
THINK IT IS, YOU WOULD THINK
WE HAVE A STRONGER DOLLAR.
>> AND YOU WOULD THINK WE WANT
A STRONGER DOLLAR.
THEY'RE TALKING DOWN THE
DOLLAR, WHICH IS REMARKABLE.
TERRIBLE IDEA.
>> YEAH. I THINK WITH
EVERYTHING BEING SAID.
FIRST OF ALL, THE DOLLAR
SHOULD BE DETERMINED BY THE
MARKET FORCES.
THE MARKET FORCES IN MY
EXPLANATION SHOULD BE POINTING
TO A HIGHER DOLLAR OVER THE
SHORT TO MEDIAN TERM.
OBVIOUSLY A LOWER DOLLAR DOES
REVISE EARNINGS AND HELP
STOCKS.
BUT FOR THE COUNTRY AS A
WHOLE, WE SHOULD WANT THE