BEN: THE FEDERAL RESERVE
RAISING INTEREST RATES,
SURPRISINGLY JOBS SURGED IN
JANUARY.
WILL FED KEEP RATES HIGHER
LONGER?
JOINING ME IS JEREMY SIEGEL.
THANKS RICH COMING BACK ON THE
SHOW.
WE APPRECIATE IT.
WE HAVE TO START WITH FRIDAY’S
BLOWOUT JOBS NUMBER.
DOES THAT PUT PRESSURE ON
JEROME POWELL AND THE FED TO
KEEP RATES HIGHER LONGER?
>> IT DOES.
WE HAVE TO RECOGNIZE THEIR 6 OR
7 WEEKS UNTIL THE NEXT MEETING.
NO QUESTION ABOUT IT, FRIDAY’S
DATA BLUE ME AWAY.
REALLY, THE JUMP OF HOURS WITH
THE INCREASE IN LABOR SUPPLY,
1.2% IN ONE MONTH, NEAR RECORD
INCREASE IN TOTAL HOURS.
SATYA NADELLA
JACK OTTER: MOST FREQUENT
BECOME A WE HEAR INFLATION
CITED IN A YEAR-OVER-YEAR
NUMBER BUT IF YOU LOOK
SHORTER-TERM, ARE WE SEEING A
LITTLE REDUCTION?
>> I AGREE, WE WANT TO PUSH
BACK AGAINST YEAR OVER YEAR.
11 MONTHS OLD DATA, YOU REALLY
SHOULD LOOK AT THE LAST 3
MONTHS OR EVEN THE LAST TWO
MONTHS WITH OTHER PRICE DATA
AND THAT SHOWS A DRAMATIC
SLOWDOWN, PARTICULARLY IN THE
HOUSING MARKET, WHICH IS
COMPUTED WITH A BIG LAG BY THE
BUREAU OF LABOR STATISTICS,
NEGATIVE RATE OF INFLATION FOR
THE LAST THREE MONTHS.
JACK OTTER: AN IMPORTANT DATA
POINT IS WAGES.
THE FED IS TRYING TO SLOW THE
JOBS MARKET SO WE DON’T END UP
WITH A PRICE SPIRAL.
ON THURSDAY, WE GOT A NUMBER
THAT LOOKED COMFORTING.
WHAT ARE YOU SEEING?
>> THE FRIDAY AHEAD OF
EARNINGS, VERY MUCH IN LINE,
THE FED IS PUSHING BACK TOO
MUCH ON WAGES.
ONE HAS TO REALIZE WORKERS HAVE
FALLEN 4% OR 5% BEHIND
INFLATION OVER THE LAST TWO
YEARS.
WE SHOULD EXPECT SOME CATCH UP.
TO SAY YOU CANNOT GO MORE THAN
2% OR 3% SORT OF DOOMS WORKERS
TO HAVE PERMANENTLY FALLEN
BEHIND INFLATION.
THERE IS TOO MUCH EMPHASIS
KEEPING WAGES UNDER CONTROL.
WE NEED HIGHER WAGES TO BRING
PEOPLE INTO THE MARKET.
WE KNOW EMPLOYERS WANT THEM AND
JOB OPENINGS ARE EXTREMELY
HIGH.
THE CONCENTRATION SHOULD BE ON
THE PRICE FUND, NOT THE WAGE
FRONT.
JACK OTTER: WHAT DO YOU EXPECT
THE FEDERAL RESERVE TO DO, AND
WHAT DO YOU THINK IT OUT TO DO?
WE ALL KNOW THE ACTUAL RATE
HIKES DON’T FULLY INTEGRATE
THEMSELVES FOR QUITE SOME TIME.
IS THERE A DANGER WHEN YOU HAVE A CRASH LATER?
A CRASH LATER?
>> ABSOLUTELY.
JAY POWELL ALREADY SAYS THE
BIGGEST FORCE OF MONETARY
POLICY WORSE -- WORKS WITH A
LEG.
SOMETIMES 6 MONTH, 9 MONTHS, 12
MONTHS.
THERE’S TRAUMA JUST TIGHTENING.
ONE OF THE GREATEST IN HISTORY.
ITS EFFECTS HAVE NOT BEEN FELT.
I PREFERRED THEY STOP NOW.
I THINK THERE IS ENOUGH
EVIDENCE THAT PRICES ARE DOWN,
THAT THEY COULD WAIT AND SEE
THE COURSE.
CONTINUED INCREASES WILL
INCREASE THE RISK OF RECESSION
IN THE SECOND HALF OF THE YEAR.
HARD TO BELIEVE, GIVEN THIS
BLOWOUT JOBS REPORT WE HAD
FRIDAY, THAT CAN TURN AROUND
QUICKLY.
BEN: LET’S COVER TO THE
MARKETS, MARCH OF 2,020, YOU
THOUGHT THE DOW COULD HIT
40,000 BY 2,025.
DO YOU TO STICK TO THAT
PREDICTION?
>> I STILL THINK SO.
WE HAVE ANOTHER TWO YEARS OF
THE MARKET.
HOW MUCH WOULD THAT BE EACH YEAR?
JACK OTTER: ABOUT 7.5% A YEAR.
>> ON THE DOW, IT WOULD BE
BELOW LONG-TERM POSTWAR
AVERAGE.
THAT IS A VERY EMINENTLY
REASONABLE PROJECTION.
IT CAN GO HIGHER.
BEN: PUTTING ALL OF THIS
TOGETHER, WHAT AREAS OF THE
STOCK MARKET LOOK BEST TO YOU?
THE AUTHOR OF STOCKS FOR THE
LONG RUN?
JACK: SO MANY YEARS OF GROWTH
OUTPACING VALUE AND IT IS A BIG
TURNAROUND.
MY RESEARCH SHOWS IT IS USUALLY
NOT A 1-YEAR PHENOMENON.
I KNOW WE HAD GROWTH RUN A LOT
IN JANUARY.
IT DID VERY WELL.
I WOULDN’T BE SURPRISED TO SEE
VALUE STOCKS, DIVIDEND PAYING
STOCKS, LOW PE STOCKS.
REASSERT THEMSELVES AS MARKET
LEADERS THROUGH THE REMAINDER