CHARLES: REPORT CARD ON THE
HEALTH OF THE U.S. ECONOMY WAS
RELEASED AND IT MISSED
CONSENSUS.
THERE WAS A TIME LAST YEAR WHEN
YOU WOULD HAVE THOUGHT 4%,
FOURTH QUARTER GDP GROWTH WOULD
BE IMPOSSIBLE.
THAT SAID I DID SEE SOME GOOD
STUFF IN THE REPORT ESPECIALLY
GROSS DOMESTIC INVESTMENT BUT
PERSONAL CONSUMPTION STUMBLED
BIG TIME, DOWN 41% FROM THE
PRIOR QUARTER.
THE REPORT ONLY ADDS INTRIGUE
FOR THE NEXT MOVE FROM THE
FEDERAL RESERVE.
WHAT IS THE TRUE STATE OF THE
U.S. ECONOMY?
WHAT MUST BE DONE AT THIS POINT
TO BRING IT BACK TO 100% HEALTH?
LET’S ASK ECONOMY ANTHONY CHAN
AND CHIEF ECONOMIST BRIAN
WESBURY, TWO OF THE BEST.
BRIAN, START WITH YOU, YOUR
ASSESSMENT OF THE GDP REPORT AND
WHERE WE ARE IN THIS ECONOMY
RIGHT NOW?
>> CHARLES, IF WE CAN THINK
ABOUT 2020 THE FIRST STIMULUS
WAS WINDING DOWN WHEN WE WENT
INTO THE FOURTH QUARTER.
THEN WE STARTED NEW SHUTDOWNS.
THEN WE DIDN’T PASS THE SECOND
STIMULUS UNTIL LATE.
WHAT GOT CAUGHT IN THE MIDDLE
WAS THE FOURTH QUARTER GDP
NUMBER.
I’M REALLY INTEREST WHAT HAPPENS
FROM HERE.
LOOKS LIKE THE FIRST QUARTER, IT
STARTS OUT PRETTY LOW BECAUSE OF
THAT WEAKER FOURTH QUARTER BUT
THEN I THINK WE START PICKING UP
IN THE SECOND HALF OF THE YEAR.
WE HAVE HEADWINDS.
THERE IS TAX HIKES COMING.
THERE IS REGULATORY INCREASES.
MORE GOVERNMENT SPENDING AND A
BIGGER GOVERNMENT.
NONETHELESS I THINK WE’LL POWER
THROUGH THAT AND HAVE A PRETTY
GOOD 2021.
CHARLES: ANTHONY, A LOT OF FOLKS
ON WALL STREET MODELED FOR FIRST
HALF OF THE YEAR, PERHAPS ENTIRE
YEAR, CARRIED BY MORE FEDERAL
RESERVE ACCOMMODATION AND A HUGE
FISCAL PACKAGE OUT OF D.C.,
MAYBE TWO, RIGHT?
1.9 RESCUE PACKAGE, AND THEN A
INFRASTRUCTURE PACKAGE AFTER
THIS.
HOW CRITICAL WE GET THOSE THINGS
TO BRIAN’S POINT AND WEIGH
CONTINUE TO SLUMP?
>> I THINK IF WE GET THE THINGS
CHARLES, THAT YOU MENTIONED, WE
CAN SEE REAL GDP GROWTH WILL
COME IN CLOSE TO 5.8%.
YOU’RE CORRECT, SPOT ON, 4%
GROWTH IS RESPECTABLE.
BUT WHEN YOU HAVE THE FIRST
QUARTER LAST YEAR, CONTRACTING
BY 5% AND SECOND QUARTER
CONTRACTING BY 31.4%, THAT MEANS
THAT DESPITE THE STRONG GROWTH
WE SAW IN THE THIRD AND
FOURTH QUARTER, WE STILL HAVE
LEVEL OF GDP COMING IN MUCH
LOWER, CLOSE TO 2 1/2 PERCENT
BELOW WHERE IT WAS IN THE
FOURTH QUARTER LAST YEAR AND FOR
THE YEAR, ON YEAR-OVER-YEAR
BASIS, REAL GDP DOWN 3 1/2%.
THAT IS WHY THE FEDERAL RESERVE
IS DETERMINED TO CONTINUE TO ADD
$120 BILLION WORTH OF LIQUIDITY
EVERY MONTH ON ANNUALIZED PACE,
1.4 TRILLION, TWO STIMULUS
PACKAGES THAT YOU MENTIONED.
CHARLES: EQUITY FUTURES TURNED
HIGHER ON THE GDP MISS, WHICH
SUGGESTS WALL STREET CAN EXPECT
MORE ACCOMMODATION, NOT JUST THE
FISCAL STUFF FROM THE FED.
ON THAT NOTE, BRIAN, YOU KNOW,
WALL STREET DIDN’T SEEM TOO
ENTHUSIASTIC YESTERDAY WHEN THE
FED SAID, YEAH WE’LL KEEP THE
$120 BILLION COMING.
THEY YAWNED.
MARKET SOLD OFF.
COULD THE FED ACTUALLY DO MORE
AT THIS POINT?
>> YOU KNOW, CHARLES, I MEAN I
HEAR YOU AND IT COULD BE FOR ALL
THOSE REASONS.
I KIND OF LOOK AT YESTERDAY AND
TODAY, WE HAVE ALL THIS STUFF
GOING ON WITH GAMESTOP AND, YOU
KNOW THESE OTHER THINGS, ROBIN
HOOD, CLOSING DOWN.
ALL OF THIS STUFF GOING ON, I
THINK THERE JUST WAS BEEN A LOT
OF CONFUSION IN THE MARKET.
WE HAVE SO MUCH LIQUIDITY AS
ANTHONY SAID.
120 BILLION A MONTH.
AND ONE THING I DO WANT TO POINT
OUT, I’M GOING TO POINT OUT BOTH
SIDES HERE, PART, EVEN, GDP WAS
DOWN LAST YEAR FROM THE YEAR
BEFORE.
EVEN AFTER THAT HUGE RECOVERY IN
THE SECOND HALF.
BUT IF WE TAKE OUT THE
GOVERNMENT’S SPENDING, REMEMBER,
WE’RE GIVING PEOPLE CASH, WE’RE
GIVING PEOPLE LOANS.
CHARLES: RIGHT.
>> IF YOU TAKE ALL OF THAT OUT
THE ECONOMY TODAY IS ABOUT 10%
SMALLER THAN IT WAS AND THAT
REFLECTS REALLY BAD DAMAGE TO
SMALL BUSINESS IN THE UNITED
STATES.
THIS GOVERNMENT SPENDING, IT IS
THE CREDIT CARD FROM THE FUTURE.
IT HAS TO BE REPAID.
IT IS FAKE GROWTH.
SO WE NEED TO OPEN UP AND GET
THESE SMALL BUSINESSES COMING
BACK.
THE FED CAN’T PRINT OUR WAY TO
WEALTH.
WE JUST HAVE TO, WE HAVE TO
REOPEN OUR WAY TO WEALTH.
CHARLES: TO THAT POINT EVERY ONE
AGREES, IF YOU KEEP US LOCKED
DOWN, WE’LL NEED ANOTHER PACKAGE
IN THREE MONTHS.
AND ANOTHER PACKAGE AFTER THAT.
I GOT 30 SECONDS BUT ANTHONY,
LET ME GET YOUR THOUGHTS.
BRIAN BROUGHT UP THE WHOLE SAGA
WITH THE GAMESTOP AND THE SHORT
SQUEEZEs.
A WHOLE LOT OF FOLKS IN MY MIND
ARE PUNTING INSTEAD OF
WALL STREET IS CIRCLING THE
WAGONS AROUND THESE HEDGE FUNDS.
THE EASY ENTITY TO PLAME HAS
BEEN THE FEDERAL RESERVE.
THE FEDERAL RESERVE AND MONEY
PRINTING DOES IT GET TO THE
RETAIL PERSON IN A SENSE THEY
CAN GO OUT THERE AND BUY
$20 BILLION WORTH OF GAMESTOP IN
A SINGLE SESSION?
>> WE KNOW ALL THAT LIQUIDITY
HAS IN FACT BOOSTED THE EQUITY
MARKET.
LAST YEAR WE HAD MORE THAN 16%
GROWTH IN THE S&P 500.
BY THE WAY ALL THE STIMULUS
PAYMENTS WITH PEOPLE STAYING AT
HOME, THE SAVINGS RATE PICKED
UP.
A LOT OF LIQUIDITY GONE INTO THE
EQUITY MARKET.
IT IS NOT JUST THE FEDERAL
RESERVE BUT THE FEDERAL