SENIOR JUDICIAL ANALYST JUDGE
ANDREW NAPOLITANO AS WELL.
BIG THREE HOURS AHEAD.
WE TAKE IT OFF HERE AT THE TOP
STORY THIS HOUR.
MARKETS REBOUND THIS MORNING
WITH THE RALLY UNDERWAY.
FEATURES INDICATE A GAIN OF 100
POINTS THIS MORNING ON THE HEELS
OF THE SELLOFF YESTERDAY.
THE SELLOFF WAS DRIVEN BY FEARS
OF A WIDENING POLITICAL CRISIS
IN ITALY AS WELL AS THE
UNCERTAINTY AROUND CHINA.
THE DOW TANKED 400 POINTS
YESTERDAY WHAT THEY SAW THEIR
BIGGEST DROP IN TWO YEARS.
THE DOLLAR GAINED GROUND AGAINST
THE EURO AND WE ARE LOOKING AT A
BIT OF A REVERSAL RATE NOW.
JOINING US TO TALK ABOUT ALL
THAT, INVESTMENT INSTITUTE
EQUITY STRATEGIST SCOTT LAND.
GOOD TO SEE YOU THIS MORNING.
WHAT IS TOP OF MIND FOR YOU IN
TERMS OF WHAT IS MOST IMPORTANT
FOR MARKETS THIS MORNING?
>> FOR THIS MORNING IN THE SHORT
TERM, IT IS CLEARLY TRADE.
ANY THOUGHT OF A TRADE WHERE THE
MARKET IS NOT GOING TO LIKE
THAT.
A VERY LOW PROBABILITY.
WE WILL SEE A LOT OF DIFFERENT
TRADE DEALS RENEGOTIATED AND
THEY WILL BE VERY TARGETED HEAR
THE CHANTS OF LINKAGE 50%, 60%
TARIFFS IN WHAT A REAL TRADE WAR
REALLY IS IS VERY SLIM.
WHEN YOU LOOK AT ITALY, I DON'T
THINK IT IS ANY SURPRISE THAT A
COUNTRY THAT HAS A SUPER HIGH
DEBT LOAD, LOW PRODUCT
CANDIDATE, HIGH UNEMPLOYMENT,
LOTS OF REGULATIONS, TERRIBLE
DEMOGRAPHICS, IT DOESN'T
SURPRISE ME ITALY HAS SOME
TROUBLE.
ON MARKETS HAVE TROUBLE.
WHAT AMAZES ME IS THE TWO YEAR
YIELD ON ITALIAN DAD IS LOWER
THAN THAT IN TWO YEARS U.S.
DEBT.
I THINK THAT THE RISK PREMIUM IN
THE BOND MARKET, THE ITALIAN
BOND MARKET HAS BEEN WAILED SO
AND I REALLY DON'T UNDERSTAND
VERY WELL.
THE BOTTOM LINE FOR ITALY IS
WE'RE FROM TIME TO TIME GOING TO
REVISIT THE EUROZONE BREAKUP
TOPIC.
WE HAVE A LOT OF PRESSURES WITH
A LOT OF DEBT OVER THERE.
IT ALL SPILLS INTO WHAT IT WILL
DO TO CONSUMER CONFIDENCE IN
EUROPE.
BUT IT WILL DO TO BUSINESS
CONFIDENCE.
THE U.S. DOES A LOT OF BUSINESS
THERE AND IF ECONOMIC GROWTH
SLOWS OR STUMBLES, THAT WOULD BE
A PROBLEM AND I THINK THAT IS
WHAT THE U.S. MARKETS ARE
WORRIED ABOUT.
>> A SCOTT, MITCH ROSCHELLE.
NO QUESTION THESE MARKETS ARE
INTERCONNECT DID.
I WAS LOOKING UP JUST NOW, THE
DEBT TO GDP IS UP 132%.
ANY OTHER COUNTRIES DO NOT TAKE
THE EUROZONE FOR NOW, THAT WE
SHOULD KEEP AN EYE ON THAT HAVE
VERY HIGH DEBT LEVELS THAT COULD
HAVE POLITICAL TURMOIL THAT WILL
SPILL INTO OUR MARKETS IN THE
FUTURE?
>> I THINK RELATED DEMOGRAPHICS
IN A LOT OF THESE COUNTRIES ARE
VERY GOOD AND CERTAINLY
PERIPHERAL COUNTRIES TO GREECE
WILL STILL CONTINUE TO BE A
PROBLEM.
PORTUGAL WILL BE A PROBLEM.
SPAIN IS THE BIGGEST PROBLEM
OUTSIDE OF ITALY AS WELL.
YOU LOOK AT SPAIN AND ITALY AND
THOSE ARE TWO PRETTY LARGE
ECONOMIES THAT HAVE A LOT OF
UNEMPLOYMENT AND BAD DEBT
LEVELS.
THOSE ARE THE COUNTRIES THAT
EVERY FEW YEARS PROBABLY AS WE
LOOK FORWARD.
THE ECB HAS SOME TOOLS HERE
KNOWS WHAT THEY ARE DOING.
I THINK IT'S REALLY DRIVING THE
BUS ON THIS THING.
FROM TIME TO TIME, WE WILL GO
FROM BACK BURNER BACK ON THE
FRONT BURNER.
RIGHT NOW IT'S ON THE FRONT
BURNER.
IT WOULDN'T SURPRISE ME OVER THE
NEXT FIVE YEARS OR SO TO SEE
SOME PERIPHERY COUNTRIES MAY BE
DROPPED OUT A COUPLE OF THOSE.
THIS IS NOT EASY TO KEEP THIS
THING TOGETHER.
WHEN YOU HAVE THE BAD
DEMOGRAPHICS, VERY MODEST
ECONOMIC GROWTH.
THOSE ARE THE TYPES OF THINGS
WERE COUNTRIES WANT THEIR OWN
MONETARY POLICY BACK.
THEY REALLY DON'T HAVE THAT
RIGHT NOW.
THEY DON'T HAVE THEIR OWN
CURRENCIES THEY CAN DEVALUE WHEN
THE ECONOMY STUMBLES.
IT'S A BIG PROBLEM.
DAGEN: I HAVE A QUESTION ABOUT
THE UNITED TO ITS ECONOMY.
YESTERDAY WITH THE TREASURY
YIELD COMES THE LARGEST DAILY
DECLINE ON TREASURY.
AT LEAST ON THAT DAY, INVESTORS
LOOK WORRIED ABOUT THE STATE OF
THE U.S. ECONOMY AND
IMPACT OF ALL OF THE TRADE
ISSUES THAT WE HAVE, WHETHER
WITH EUROPE OVER THE STEEL AND
ALUMINUM CARE, EUROPE LOOKING
FOR AN EXEMPTION THEREFROM THE
THREAT OF A 25% TARIFF IN THE
NAFTA NEGOTIATIONS AND
NEGOTIATIONS WITH CHINA.
A HARD TURN BY THE TRUMP
ADMINISTRATION YESTERDAY
ANNOUNCING $50 BILLION.
A FINALIST OF TARIFFS ON
$50 BILLION IMPORTS WILL BE
RELEASED BY JUNE 15, TRYING TO
BASICALLY GET SOME LEVERAGES
WILBUR ROSS HEADS TO CHINA.
TAKE A HARD LINE ON THE U.S.
TECHNOLOGY.
BUT ALL OF THIS INFLUX HAVE AN
IMPACT ON THE U.S. ECONOMY?
WHETHER ITS FARMERS WHO CAN'T
SELL SOYBEANS TO CHINA.
WHETHER IT IS JOB GROWTH IN
STEEL COMMUNITIES IN THIS
COUNTRY.
>> YOU RAN DOWN THE LAUNDRY LIST
PRETTY WELL THERE.
A REAL TRADE WAR RESULT IN LESS
TRADE VOLUME AND IS CERTAINLY AN
ISSUE.
GLOBAL FEARS, TRADE WAR FEARS,
PEOPLE AROUND THE U.S.
TREASURIES AND HIDE THERE.
THE BOND MARKET FULLY BELIEVES,
IN MY OPINION THAT THE FED HAS
HIKES NEXT YEAR IN PART OF IT
OTHER THAN JUST A FLIGHT TO
SAFETY IS STUDIED THAT MANY
HIKES IN A GOOD, NOT GREAT GDP
TYPE OF AN ENVIRONMENT IS A HEAD
WRITTEN FOR THE ECONOMY AND IT
MAKES SENSE TO ME THAT THE BOND
MARKET WOULD RALLY WHEN IT FEARS
THAT ALL OF THESE THINGS ARE
GOING TO SLOW INFLATION, SLOW
THE ECONOMY.
THAT WAS A GIGANTIC DROP IN
YIELD YESTERDAY OVER THE COURSE
OF A COUPLE DAYS.
YOU KNOW, IT IS A COMBINATION OF
THINGS THAT I THINK A LOT OF
THIS JUST THE BOND MARKET DOES
NOT EXPECT VERY MUCH INFLATION
AND ALL AND IT CERTAINLY DOESN'T
EXPECT A SURGE IN ECONOMIC
GROWTH.
MARIA: ARE YOU EXPECTING A
SLOWDOWN BECAUSE THERE IS A
FEELING ONCE WE GET INTO 2019
AND 2020, THINGS SLOWED DOWN
QUITE A BIT FOR A NUMBER OF
REASONS.
INCLUDING DEMOGRAPHICS.
TO STOP WHERE YOU ARE.
>> OR NUMBER FOR GDP THIS YEAR
IS TO .9%.
FOR THIS YEAR THAT IS GOOD.
NOT GREAT.
I SUSPECT HE WILL BE SLOWER NEXT
YEAR.
UNLESS YOU CAN GET THIS CAP EX
AND BETTER CONSUMER SPENDING.
YOU HAVE TO REMEMBER WE ARE LATE
IN THE CYCLE.
I JUST DON'T THINK YOU'RE GOING
TO SEE A BIG JUMP IN ECONOMIC
DIGNITY.
THE STOCK MARKET TO .5%, 3% LOW
INFLATION.
STOCKS CAN DO FINE.
MARIA: HOW WORRIED ARE YOU ABOUT
NAFTA?
THE PRESIDENT SLAMMED IT IS BAD
FOR U.S.
LISTEN TO WHAT THE PRESIDENT
SAID LAST NIGHT.
>> WE ARE RENEGOTIATING NAFTA.
REMEMBER WHAT I SAID.
WE ARE HAVING -- WE ARE HAVING,
YOU REMEMBER I SAID TO
TENNESSEE, EVERYONE.
WE HAVE SUCH A BAD DEAL WITH
MEXICO.
WE HAVE SUCH A BAD DEAL WITH
CANADA.
HE LIVES WITH MEXICO OVER
$100 BILLION A YEAR WITH THIS
CRAZY NAFTA DEAL.
MARIA: BUT THIS RELATIONSHIP IS
IMPORTANT FOR ALL INVOLVED.
THE U.S., CANADA, MEXICO.
WHAT ARE THE IMPLICATIONS IT
DOES NOT GET ON OVER TO THE
LONG-TERM.
>> THE STOCK MARKET WILL NOT
LIKE IT.
MEXICO AND CANADA ARE TWO
TRADING PARTNERS OF THE U.S.
ONCE AGAIN, IF THERE IS LESS
TRADE, THAT IS NOT GOOD FOR
BUSINESS.
NOT GOOD FOR THE STOCK MARKET.
WHAT WE ARE GOING TO SEE IF SOME
GIVE-AND-TAKE HERE AND IT IS
GOING TO BE PRETTY TARGETED AND
IT'S NOT GOING TO BE A DEAL THAT
THERE MAY BE A LOT OF COMMENTS
OUT, BUT I THINK IN REALITY IF
WE GET SOMETHING DONE HERE IT'S
GOING TO BE TARGETED IN BOTH
COUNTRIES, ALL THREE COUNTRIES
WILL BE HAPPY.
MARIA: SOUNDS LIKE YOU'LL PUT
MONEY TO WORK IN STOCK RIGHT
HERE.
>> ANYWHERE DOWN TOWARD DOW, I
THINK THE MARKET WILL BE 2860.