ARE YOU EVER LISTENING?
THAT’S MY RIFF.
JOINING ME NOW TO TALK ABOUT
THESE LESS THAN STELLAR NUMBERS,
JOHN CARNEY,
"BREITBART ECONOMICS FINANCE"
EDITOR AND COAUTHOR OF
"BREITBART BUSINESS DIGEST."
JOE LAVORGNA, FORMER NATIONAL
ECONOMIC COUNCIL CHIEF ECONOMIST
AT THE WHITE HOUSE.
SENIOR FELLOW AT AFPI.
ALL RIGHT, GENTLEMEN, THESE ARE
NOT GOOD NUMBERS.
I WILL BEGIN WITH YOU, JOE
LAVORGNA.
WHAT DOES IT TELL BUT THE
FOURTH QUARTER AND WHAT DOES IT
TELL BUT THE FIRST QUARTER?
BY THE WAY IF I CAN GET THIS
OUT, HOLD ON ONE SECOND, YOU GOT
SOME LAYOFF ANNOUNCEMENTS TODAY.
18,000 LAYOFFS AT AMAZON, 11,000
AT META FACEBOOK, 10,000 AT
MICROSOFT, WHICH IS REALLY A
FABULOUS COMPANY, 8,000 AT SALES
FORCE.
GOLDMAN SACHS HAVING BIG LAYOFFS
TOO.
SO WE MAY SEE SOME SOFTER
EMPLOYMENT NUMBERS BUT, JOE
LAVORGNA HOW BAD IS THE STORY?
>> FIRST OF ALL I HAVE A LITTLE
BIT OF A BONE TO PICK WITH YOU.
LARRY: [LAUGHTER]
>> WE HAD INFLATIONARY RECESSION
IN THE FIRST HALF OF OH 22.
LARRY: THAT IS TRUE, LAST YEAR.
>> NOW TO ANSWER YOUR QUESTION
WE’LL HAVE A MORE TRADITIONAL
RECESSION SOMETIME STARTING
SOON.
LARRY: DEFLATIONARY RECESSION.
>> DEFLAIR NATION REMEMBER
RECESSION, RIGHT.
THE PRODUCTION NUMBERS, WE
SELDOM NOT IN BEEN IN RECESSION
WITH PRODUCTION DOWN 8%
ANNUALIZED THE HOUSING STARTS IN
RECESSION.
WE SEE THAT IN BUILDING STARTS,
SALES, MORE OF A TRADITIONAL
DOWNTURN.
MY GUESS SOONER THAN LATER.
BOND MARKET IS BEHAVING SUCH.
MASSIVE RALLY IN 10-YEAR YIELDS.
THE CURVE IS VERY INVERTED.
MARKET PRICING EASING LATER THIS
YEAR.
IT WILL GET UGLY.
LARRY: WILL THE FOURTH QUARTER
OF THIS YEAR BE NEGATIVE, IS
THAT POSSIBLE WITH THESE
NUMBERS?
>> NOT A ARITHMETIC, WHERE THE
GROWTH GOT WEAK AS WE WENT YOU
THERE THE QUARTER.
SO THE ISM MANUFACTURING
WEAKENED IN NOVEMBER, DECEMBER
PRODUCTION WAS SOFT BUT THIS IS
THE POINT I MADE TO YOU BEFORE,
IF YOU LOOK AT THE, SIX LAST
RECESSIONS THE ECONOMY GREW OVER
3% RIGHT BEFORE THE ECONOMY
TIPPED OVER.
EVEN IF GROWTH LOOKS GOOD IN Q4
IT TELLS US NOTHING ABOUT WHERE
WE’RE GOING.
LARRY: KIND OF LOOKS LIKE, JOHN
CARNEY, SEQUENTIALLY NOVEMBER
WORSE THAN OCTOBER, DECEMBER
WORSE THAN NOVEMBER.
>> RIGHT.
LARRY: AND SO EVERYONE IS
INTERESTED IN WHAT HAPPENS IN
THIS YEAR.
>> WE GOT A HINT OF THIS.
LARRY: WHAT WILL HAPPEN IN
JANUARY?
>> WE GOT A HINT OF THIS FROM
THE EMPIRE STATE MANUFACTURING
SURVEY FROM THE NEW YORK FED.
THAT THING FELL OFF A CLIFF.
IT WAS MUCH MORSE THAN ANYBODY
THOUGHT T WENT FROM A NEGATIVE
11 I THINK ON THE GENERAL
BUSINESS TO NEGATIVE 32.
SO THIS THING WAS A WRECK.
SO IT IS TELLING US THAT THE
INDUSTRIAL PRODUCTION NUMBERS
WE’RE LOOKING AT FOR DECEMBER
ARE PROBABLY GETTING WORSE IN
JANUARY RIGHT NOW.
YOU’RE RIGHT, IT GOT WORSE, YOU
CAN SEE IT ALL THROUGHOUT THE
ECONOMY N OCTOBER RETAIL SALES
WERE HIGHER THAN THEY WERE IN
NOVEMBER WHICH WERE HIGHER THAN
THEY WERE IN DECEMBER.
SO WHAT WE’RE SEEING IS THE
SLIDE TOWARDS RECESSION
HAPPENING ACROSS THE ECONOMY.
LARRY: WAIT, LET’S JUST THINK
ABOUT THIS.
WE KNOW IN JANUARY, BOTH ISMs,
MANUFACTURING AND SERVICES, WERE
DOWN, IS THAT RIGHT?
>> I -- YES.
>> DECEMBER.
>> DECEMBER NUMBERS.
LARRY: SO WE DON’T KNOW WHAT THE
ISM IS?
>> WAITING FOR JANUARY.
WE ONLY REALLY HAVE ONE SURVEY
NUMBER OUT OF JANUARY, NEW YORK.
LARRY: NEW YORK.
MANUFACTURING LEFT IN NEW YORK?
I HAVE WAS AMAZED AT THAT.
THAT IS KIND OF A JOKE.
>> WHAT WE’RE HOOKING FOR NOW IS
CONFIRMATION FROM THE PHILLY FED
SURVEY.
THAT IS THE MOST IMPORTANT ONE.
IT HAS THE LONGEST HISTORY.
IT BEST REFLECTS WHAT IS GOING
ON AROUND THE COUNTRY.
SO IF IT IS JUST NEW YORK THAT
MIGHT NOT BE RECESSION RIGHT
AWAY.
I WAS IN THE SECOND HALF OF YEAR
RECESSION BECAUSE THE LABOR
MARKET WAS DOING SO WELL.
THE NUMBERS TODAY HAVE ME
WORRIED IT IS COMING MUCH FASTER
THAN WE THOUGHT.
LARRY: JOE LAVORGNA HOPE FOR A
SOFT LANDING IS OUT THE WINDOW,
AND ARE YOU CERTAIN OF THAT?
>> NO, HOPE FOR SOFT LANDING IS
OUT THE WINDOW, GIVING LEADING
INDICATORS TURNED OVER WE’RE AT
REFLECTION POINT.
IF WE GET WITH CHINA BENEFIT OF
SUPPLY CHAINS OPENING UP MORE,
FED PIVOTS, I DON’T THINK THEY
WILL MAKE THE TRUMP TAX CUTS
PERMANENT AFTER FISCAL DEAL IF
THERE IS RECESSION.
SEEMS RECESSION IS BY FAR THE
LIKELY CASE.
DOESN’T HAVE TO BE DEEP.
IT DEPEND ON WHAT THE POLICY
RESPONSE IS AS RECESSION TAKES
HOLD.
IF THE FED KEEPS RATES HIGH WITH
SOME IDIOTIC FISCAL PLAN IT
COULD BE WORSE.
LARRY: WHAT SHOULD WASHINGTON
DO, JOHN CARNEY?
>> THE FED SHOULD NOT LOOK AT
THESE NUMBERS TO DECIDE
INFLATION HAS BEEN DEFEATED.
WE HAD TWO MONTHS NOW OF SOFTER
INFLATION NUMBERS.
THAT HAPPENED IN THE PAST.
THEN YOU GET INFLATION COMING
RIGHT BACK IF THE FED LOOKS LIKE
IT WILL STEP BACK.
SO THE FED SHOULD NOT AT ALL --
LARRY: WHY IS GOLD BOOMING AND
THE DOLLAR FALLING SPEAKING OF
AND INFLATION RECOVERY?
I DON’T KNOW WHAT ALL THAT
MEANS.
DEEPLY INVERTED CURVE, SHORT
RATES WAY ABOVE LONG RATES, OKAY
THAT IS NEGATIVE SIGN.
JOE IS RIGHT.
HEEDING INDICATORS PLUNGING
BASICALLY.
M2 MONEY SUPPLY PLUNGING BUT
GOLD IS SOARING.
I HAVE NOT LOOKED AT IT DID.
BEEN BUSY TODAY.
GONE UP $300 LAST MONTH OR TWO.
OIL LOOKS LIKE IT IS RALLY.
WHAT’S THAT ALL ABOUT?
>> I THINK ONE OF THE THINGS
GOING ON IS ONE, CHINA REOPENING
IS HAVING PEOPLE THINK OKAY IT
IS FOR REAL.
PEOPLE WERE NOT CONFIDENT ABOUT
THIS.
SO THAT EXPLAINS THE OIL STORY
VERY WELL.
THERE IS, THE OIL DEMAND FROM
CHINA WAS WAY DOWN.
IT STILL MIGHT BE DOWN MORE THAN
PEOPLE EXPECT IT TO BE.
I THINK THAT IS ALSO THE, SORT
OF THE SEARCH FOR ALTERNATIVE
CURE REP CURRENCIES GOING AROUND
THE WORLD DRIVING UP THE PRICE
OF GOLD.
SAUDI ARABIA SAID THEY’RE OPEN
TO BEING PAID IN THINGS OTHER
THAN DOLLARS.
IF YOU DON’T HAVE, IF YOU DON’T
WANT DOLLARS, MAYBE YOU WANT
GOLD TO BE ABLE TO PAY OFF YOUR
OIL DEBTS.
LARRY: JOE LAVORGNA, WHAT DO YOU
WANT THE GOVERNMENT TO DO?
>> STAND BACK AND STAY OUT.
LARRY: YOU WERE NEC CHIEF
ECONOMIST IN THE WHITE HOUSE.
WHAT SHOULD GOVERNMENT DO?
WE’VE, WE MAY NEED AN ECONOMIC
RESCUE THIS YEAR.
IT MAY, MAY BE COMING ON LIKE
GANGBUSTERS.
SO WHAT SHOULD GOVERNMENT DO?
>> THE QUESTION I WAS GOING TO
SAY TO YOU, IT WOULD BE GREAT IF
WE ACTUALLY FIGURED OUT THE COST
BENEFIT OF CERTAIN REGULATION.
WE DID THAT UNDER PRESIDENT
BUSH 43.
THEY WENT SYSTEMATICALLY WHAT IS
EFFECT I HAVE WHAT’S NOT.
OFTEN TIMES THEY DO THING
WITHOUT ANY THOUGHT MAKING --
LARRY: TRUMP WAS A BIG
DEREGULATOR.
>> HE WAS A BIG DEREGULATOR.
REALITY, LARRY, AS MUCH AS WE
MIGHT BEAT UP THE
ADMINISTRATION, DESERVEDLY SO,
THE CURRENT ONE, THE FED HAS A
LOT TO BLAME.
THEY WERE WAY TOO SLOW RAISING
RATES, WAY TOO SLOW REDUCING
BALANCE SHEET, WAY TOO SLOW
KEEPING RATES IN PLACE.
I’M MUCH MORE PESSIMISTIC, LESS
WORRY ABOUT INFLATION THAN YOU,
MAYBE JOHN.
I WANT THE FED TO EASE RATES.
LARRY: I DON’T WANT THE FED TO
CONTROL THE ECONOMY.
CAN I JUST SAY THAT?
I THINK IT’S A WALL STREET
AFFLICTION, FED, FED, FED, FED.
OKAY, I UNDERSTAND, THEY ARE A
POWERFUL INFLUENCE BUT SO IS
FISCAL POLICY.
TAXES SPENDING REGULATION.
>> WE GET TO VOTE FOR THOSE
THINGS OR AT LEAST PEOPLE WHO
ENACT THEM, WE DON’T GET TO
DECIDE WHO IS ON THE FED.
LARRY: THE CRAZY CLIMATE CHANGE
POLICIES, WEE DEPLETING THE
STRATEGIC PETROLEUM RESERVE
WHICH WAS STUPID BUT IN GENERAL,
CLIMATE POLICIES, RADICAL
CLIMATE POLICIES HAVE DAMAGED
THIS ECONOMY.
THEY HAVE DAMAGED THE ENERGY
SECTOR, OKAY?
REGULATORY POLICIES.
YOU GOT THIS CRAZY WOMAN AT THE
FEDERAL TRADE COMMISSION WHO NOW
WANTS NON-COMPETE CONTRACTS TO
BE OFF THE BOARD.
SHE IS WAGING WAR AGAINST ALL
THE AMERICAN BUSINESS.
WHAT IS HER NAME, KHAN?
>> RIGHT.
LARRY: LOOK WHAT SHE IS DOING.
FERC SAID YOU CAN’T BUILD A NEW
PIPELINE.
ALL THESE THINGS ADD UP.
THEY SHOULD BE REVERSED.
>> PRESSURE COMING THIS WEEK,
TIMED TO GO ALONG WITH DAVOS ON
BANKS.
A REPORT WAS PUT OUT BASICALLY
HE WILL WHYING AT THE BANKS TO
CONTINUE TO PROVIDE FINANCING TO
FOSSIL FUELS.
LARRY: WHO PUT THAT OUT.
>> -- BANK OF AMERICA.
GROUP CALLED RECLAIM FINANCE I
BELIEVE IS FRINGE NON-GOVERNMENT
ORGANIZATION.
I TRIED TO LOOK INTO IT.
CAN’T FIND OUT WHERE THE MONEY
COMES FROM.
A SHADOWY, CLIMATE CHANGE
PRESSURE GROUP.
THEY PUT OUT THE REPORTS.
REPORTED IN THE AMERICAN MEDIA
IF BANKS DONE SOMETHING WRONG
CONTINUE TO FINANCE FOSSIL
FUELS.
LARRY: WE NEED TO ROLL BACK
ANTI-GROWTH POLICIES, JOE
LAVORGNA.
THAT HAS SOMETHING TO DO WITH
THIS.
I KNOW THE FED WAS LATE TO THE
GAME BUT REMEMBER MANY WAYS IT
WAS FISCAL POLICY FORCING
MONETARY, LITERAL I THE
GOVERNMENT WAS STUFFING BANK
ACCOUNTS WITH ALL THIS EXTRA
CASH AND THAT CHICKEN CAME HOME
TO ROOST IN THE FORM OF HIGHER
PRICES.
THE FED ACCOMMODATED, MONETIZED
IT.
THEY’RE TAKING IT BACK.
I GET ALL OF THAT.
I THINK FISCAL POLICY HAS TO
CHANGE.
WE’LL TALK ABOUT THAT WITH CHIP
ROY FROM THE NEW HOUSE
REPUBLICAN MAJORITY.
WE’LL HAVE TO SAVE THE ECONOMY
THIS YEAR.
IF THESE NUMBERS ARE APOCRYPHAL,
MAYBE THEY WILL MIRACULOUSLY
RISE IN JANUARY, BUT IF THEY
DON’T THIS RECESSION WILL COME
ON A LOT FASTER THAN PEOPLE
THOUGHT, A LOT HARDER, MAYBE A
LOT DEEPER.
WASHINGTON HAS TO RESPOND TO
THAT.
>> WHEN YOU SEE THE RETAIL SALES
NUMBERS THAT WERE DOWN SO MUCH,
THINK OF WHAT THAT IS GOING TO
DO WITH THE INVENTORY ADJUSTMENT
IN THE FIRST QUARTER OF THIS
YEAR.
BUSINESSES ARE GOING TO BE LEFT
OVER WITH A TON OF UNEXPECTED
INVENTORY.
THEY WILL BE SELLING THAT OFF.
THAT WILL BE DOWNSIDE FOR THE
GDP AS WELL.
LARRY: WHAT FUN.
WHAT FUN.
GLAD I HAVE A JOB.
BY THE WAY, FOLKS, IF YOU HAVE A
JOB, KEEP YOUR JOB.
PUT YOUR SHOULDER TO IT.
KEEP YOUR JOB.
ANYWAY, JOHN CARNEY, THANK YOU.
JOE LAVORGNA, THANK YOU.