MARIA: WELCOME BACK.
MARKETS ARE UNDER PRESSURE THIS
MORNING.
THE BANK OF ENGLAND RAISED
INTEREST RATES FOR THE SECOND
TIME IN A DECADE.
BUT REALLY WHAT'S UNDERA MINING
FUTURES THIS MORNING IS
SPECULATION THAT WE'RE SEEING
THIS SPAT WITH CHINA ESCALATE,
DOW INDUSTRIALS EXPECTED TO BE
DOWN 150 POINTS, THE NASDAQ DOWN
55 POINTS OUT OF THE GATE.
THE FEDERAL RESERVE KEPT
INTEREST RATES UNCHANGED.
THEY HIGHLIGHTED THE STRENGTH OF
THE AMERICAN ECONOMY, SUGGESTING
WE WILL SEE FURTHER RATE HIKES
IN THE FUTURE, PERHAPS THE NEXT
MEETING.
JOINING US RIGHT NOW TO TALK
MAMANI IS HERE.
THE UNDERLYING ECONOMY ON A
GLOBAL BASIS IS DOING QUITE
15% THIS QUARTER.
SLOWS DOWN A LITTLE BIT BUT NOT
MEANINGFULLY.
EVERYTHING IS GOOD IF WE CAN GET
BEYOND THE TARIFF ISSUE, THE
MARKETS ARE READY TO RUN.
MARIA: DO THE TARIFFS CUT INTO
MARGINS AT SOME POINT AND CHANGE
THE EARNINGS STORY?
>> IT CUTS INTO MARGINS A LITTLE
BIT, CUTS INTO GROWTH A LITTLE
BIT BUT DOESN'T CHANGE THE
PICTURE MEANINGFULLY.
>> I'M WONDERING LONG-TERM,
THERE'S A DEBATE ON -- WE TALKED
ABOUT ON THE SHOW, IS THE SUGAR
AT A LONG-TERM REALLY HIGHER
LEVEL OF GROWTH IN THE U.S.?
>> I THINK THERE'S CERTAINLY
SOME ELEMENT OF SUGAR HIGH, WHEN
YOU HAVE A LARGE AMOUNT OF
STIMULUS GOING THROUGH THE
ECONOMY, YOU GET THAT HIGH.
BUT EVEN BEYOND THAT, WE ARE
TALKING ABOUT 2% GROWTH WHICH IS
NOT FANTASTIC GROWTH THAT
EVERYONE WANTS, BUT IT'S STILL
AND EARNINGS ON THE OTHER HAND
ARE DOING VERY WELL, EVEN AS I
MENTIONED BEFORE, EVEN WITHOUT
TAX CUTS THE EARNINGS GREW
AROUND 15%.
>> YOU'RE STILL SEEING NEW
NORMAL LIVING ROOM, 2% GROWTH,
IS A GAME CHANGER.
INVESTMENT INCREASES
MEANINGFULLY AND ON THE BACK OF
IT, PRODUCTIVITY INCREASES
MEANINGFULLY.
WE WON'T SEE THAT FOR A WHILE.
IT TAKES A LONG TIME FOR IT TO
MANIFEST ITSELF.
MARIA: WE HAVE SEEN BUSINESS
SPENDING PICK UP QUITE A BIT AS
A RESULT OF THE ROLLBACK IN
RINGS
RENGS
POINT IN THE CYCLE ANYWAY.
I'M SURE THERE WAS POSITIVE
IMPACT FROM TAXES.
IT HASN'T CHANGED THE GAME JUST
YET.
REST OF THE MARKET THROUGHOUT
THE REST OF THE YEAR?
>> WE STILL HAVE FOCUSED ON TECH
AND COMPANIES AND SECTORS THAT
CAN DELIVER SIGNIFICANTLY BETTER
GROWTH THAN THE UNDERLYING
ECONOMIC GROWTH TREND.
I THINK TECH IS THE TOP OF THAT
LIST.
THEY ARE EXECUTING.
I THINK APPLE EARNINGS THAT JUST
TO THE SYSTEM BUT I THINK
BETWEEN GOOGLE AND APPLE WE ARE
RE-ESTABLISHING THE EARNINGS
STRENGTH FOR TECH.
NOW OR IS THERE STILL ROOM TO
GROW?
>> I THINK THERE'S STILL ROOM TO
GROW MANY ALL OF THESE TECH
COMPANIES ARE EXECUTING AS WELL
AS ANYONE CAN EXPECT.
MARIA: THEN THERE'S HIGHER
INTEREST RATES, THE 10 YEAR
TREASURY TOPPED 3% YESTERDAY,
FIRST TIME IN ALMOST TWO MONTHS
WE'VE SEEN THAT.
WORRIES, STOCK MARKET SELLOFF.
DO YOU WORRY ABOUT 3%?
>> 3% IS JUST A NUMBER.
WHAT YOU'RE REALLY TALKING ABOUT
IS ARE RATES GOING TO BE HIGH ON
A SUSTAINED BASIS OVER THE NEXT
TWO, THREE, FIVE YEARS, AND OUR
OUTLOOK IS THAT'S PROBABLY NOT
GOING TO BE THE CASE, PRIMARILY
BECAUSE OF OUR OUTLOOK FOR 2%
UNDERLYING TREND GROWTH AND AT
THAT LEVEL, I THINK WE ARE
TALKING ABOUT 3% BEING ON THE
HIGHER END OF RATES AS OPPOSED
TO THE RATES MOVING UP
MEANINGFULLY HIGHER.
DAGEN: JUST TO CONNECT THIS
STORY WITH THE STORY OF THE DAY,
AND THAT IS THE THREAT THAT
WE'RE GOING TO SLAP 25% TARIFF
ON AN ADDITIONAL $200 BILLION OF
IMPORTS FROM CHINA, THE THINKING
THIS ADDS TO INFLATION
PRESSURES.
THERE'S A BIG DIFFERENCE BETWEEN
A 10% TAX ON THESE IMPORTS AND A
25% TAX.
IT ADDS TO INFLATION PRESSURES.
LONGER TERM INTEREST RATES UP.
THIS IS AT A TIME, THIS IS ON
THE FRONT PAGE OF THE WALL
STREET JOURNAL, DEFICITS PROMPT
THE TREASURY TO BOOST BORROWING.
CRISIS THAT PEOPLE ARE CONCERNED
MORE WITH THESE TARIFFS.
YOU BETTER LOOK OUT BELOW IN
I THINK INFLATIONARY PRESSURES
AT THE MARGINS, IT DOESN'T
CHANGE THE DYNAMIC DRAMATICALLY.
BUT THE POINT ABOUT DEFICITS IS
EXTRAORDINARILY GOOD ONE.
HAVE TO DO MORE IMPORTANT THAN
TARIFFS IS TO REDUCE YOUR FISCAL
TRADE DEFICITS.
>> YES, PULL IN THE SPENDING AND
NOT HAVE THE STIMULUS WHEN THE
ECONOMY IS DOING REASONABLY
WELL, ESPECIALLY ON THE SPENDING
SIDE.
PRODUCTIVITY DOWN THE ROAD.
MARIA: TOMORROW WE HAVE THE
JULY JOBS NUMBER OUT.
WHAT ARE YOU EXPECTING?
WILL WE SEE A GOOD NUMBER.
>> YES, THE UNDERLYING ECONOMY
IS DOING RIGHT.
THE EXPECTATION IS AROUND
200,000, I THINK WE'LL BE THERE,
GIVE OR TAKE 10 OR 20,000 THIS
WAY OR THAT WAY.