>>> I DON'T THINK THEY WILL BE
ABLE TO RAISE RATES.
I DON'T THINK THEY SHOULD RAISE
RATES AT ALL.
AND I THINK THAT I'M VERY GLAD
THAT THEY LEARNED.
LIZ: THE FOUNDER OF THE WORLD'S
BIGGEST HEDGE FUND ISSUED A
WARNING IN DAVOS AT THE WORLD
ECONOMIC FORUM TODAY.
RAY DALIO TELLING MARIA THE FED
WOULD KEEP ITS HAND AWAY FROM
THE RATE CUT FLAMES NOW AFTER
HAVING BEEN SINGED BUT REMEMBER,
LAST MONTH, RIGHT BEFORE THE
FED'S DECEMBER MEETING, PETER
SCHIFF WENT FURTHER THAN THAT,
WHEN I ASKED HIM WHAT THE FED
WILL SOON BE FORCED TO DO.
>> I THINK REGARDLESS OF WHAT
THE FED DOES ON WEDNESDAY --
LIZ: ANSWER MY QUESTION.
>> YEAH, I AM.
REGARDLESS OF WHAT THEY DO, THE
NEXT THING THEY'RE GOING TO DO
IS CUT RATES.
THEY'RE GOING BACK DOWN TO ZERO.
LIZ: SO DALIO SAYS PAUSE, SCHIFF
SAYS THE FED SHOULDN'T BUT WILL
CUT RATES.
WHAT DOES WALL STREET'S MOST
CLOSELY FOLLOWED ECONOMIST SAY?
LET'S BRING HIM IN.
MOHAMMED EL-ERIAN OF ALLIANZ IS
HERE.
WHO'S GOT IT RIGHT?
DALIO, SCHIFF OR NEITHER?
>> I THINK BOTH, IN THE SENSE
THEY WILL DO NOTHING THIS YEAR
AND IF THEY DO ANYTHING NEXT
YEAR WHICH IS 2020, THEY WILL
PROBABLY CUT.
LIZ: WOW.
OKAY.
WHY?
DO YOU PREDICT A RECESSION HERE?
>> I CERTAINLY DON'T.
I THINK THE U.S. ECONOMY IS IN A
REALLY GOOD PLACE.
JUST LOOK AT THE LAST LABOR
REPORT.
THE U.S. ECONOMY PRODUCED TWICE
AS MANY JOBS AS PEOPLE EXPECTED.
WAGES ARE GOING UP BY 3.2%.
PEOPLE ARE COMING BACK INTO THE
LABOR FORCE.
WHAT'S THE PROBLEM WITH THE U.S.
ECONOMY?
TWO.
ONE THAT WE CAN SOLVE EASILY,
SELF-INFLICTED WOUNDS.
THE FED AS RAY DALIO SAID, HAS
LEARNED, WE DON'T HAVE TO WORRY
TOO MUCH ABOUT THE FED
COMMUNICATION, AND HOPEFULLY, WE
CAN SOLVE THE PARTIAL GOVERNMENT
SHUTDOWN.
THE SECOND ISSUE IS MUCH DEEPER.
THE REST OF THE WORLD IS IN A
MUCH WORSE PLACE THAN WE ARE.
EUROPE IN PARTICULAR.
SO KEEP AN EYE ON WHAT'S
HAPPENING THERE BECAUSE THE RISK
IS THEY MAY CONTAMINATE US.
I DON'T THINK THEY WILL BUT THEY
MAY.
LIZ: YOU WROTE AN OP-ED FOR "THE
WASHINGTON POST."
I FOUND IT REALLY INTERESTING.
IT WAS ABOUT THE U.S. ECONOMY
AND ALL OF THIS, BUT IT WAS ALSO
COMMENTING ON WHAT COMES OUT OF
DAVOS AND THE WORLD ECONOMIC
FORUM.
I HAVE BEEN NINE YEARS AND I
THINK IT REALLY ATTRACTS SOME OF
THE MOST POWERFUL BUSINESS AND
WORLD LEADERS BUT YOU
SPECIFICALLY SAID IT TENDS
REALLY ALMOST TO BE SOMEWHAT OF
AN ECHO CHAMBER OF NEGATIVITY
AND IT REALLY DOESN'T HELP
ANYBODY.
IN THIS ARTICLE YOU SAY THE
GLOBAL ECONOMY DOESN'T HAVE TO
SLOW DOWN.
YOU ALSO SAID DAVOS HAS
HISTORICALLY BEEN MUCH BETTER AT
LOOKING BACKWARD THAN FORWARD.
IT WILL HELP NO ONE TO ENGAGE IN
POINTLESS MOANING AND BLAME
GAMES.
PEOPLE IN DAVOS ARE VERY
NEGATIVE RIGHT NOW.
ARE YOU AS NEGATIVE?
BECAUSE TO ME I THINK IT LOOKS
RELATIVELY DECENT HERE.
>> I'M NOT NEGATIVE ON THE U.S.
ECONOMY.
I CAN UNDERSTAND THE CONCERNS
ABOUT EUROPE AND CHINA, BUT I
THINK THAT PEOPLE GO TOO FAR IN
EXTENDING THAT TO THE U.S.
NOW, WHY ARE PEOPLE SO NEGATIVE
IN DAVOS?
THE DYNAMICS ARE THE FOLLOWING.
THEY COME TOGETHER, THEY TALK TO
EACH OTHER.
WHAT DO THEY TALK TO EACH OTHER
ABOUT?
WHAT THEY JUST SAW.
WHAT THEY JUST EXPERIENCED.
AND WHAT ARE THEY EXPERIENCING?
THE EFFECT OF A SLOWDOWN.
SO WHAT THEY TEND TO DO, WE SAW
THIS LAST YEAR WHEN THEY
PROJECTED FORWARD THE GOOD
FEELING, THEY PROJECT FORWARD
WHERE WE HAVE JUST COME FROM.
BE CAREFUL ABOUT DAVOS.
IT TENDS TO BE MUCH MORE
BACKWARD-LOOKING THAN
FORWARD-LOOKING.
LIZ: TELL ME, ASIDE FROM THE
U.S. BECAUSE YOU SAY WE LOOK
RELATIVELY STRONG, WHAT OTHER
COUNTRY HAS A HEALTHY ECONOMY
THAT YOU LOOK AT AND SAY WELL,
THAT MAY BE A PLACE TO INVEST?
>> SO THERE ARE VERY FEW RIGHT
NOW.
IF YOU LOOK AT EUROPE, THAT IS
THE MOST CONCERNING.
THEY ARE RUNNING OUT OF STEAM,
THEY MAY PRODUCE 1.8% TO 2%
GROWTH WHEN THE NUMBERS FOR LAST
YEAR COME OUCHL
YEAR COME OUT.L
I'LL BE SURPRISED PLEASANTLY IF
THEY COME IN AT HALF THAT LEVEL.
THERE IS SIMPLY NO ECONOMIC
POLICY MOMENTUM.
AND REASONS WHY IS POLITICS,
LOTS OF TRANSITION AND BREXIT
WHICH IS SUCKING OUT ALL THE
OXYGEN.
I REALLY WORRY ABOUT EUROPE AND
IT'S VERY HARD TO FIND A SHINING
LIGHT IN EUROPE.
EVEN GERMANY IS UNDER
SIGNIFICANT PRESSURE.
LIZ: WELL, LET'S GET TO BREXIT
FOR A SECOND.
ARE WE OVERSTATING THE VALUE OR
THE IMPACT THAT BREXIT MIGHT
HAVE ON OUR ECONOMY?
DOES IT HAVE I GUESS THE ABILITY
TO DERAIL WHETHER IT'S OUR
ECONOMY OR OUR MARKETS, OR IS
THAT UF
THAT JUST AN OVERSTATEMENT?
>> IT'S A HUGE OVERSTATEMENT.
IF YOU WANT TO LOOK AT THE
EFFECT OF BREXIT, FOCUS FIRST
AND FOREMOST ON THE UNITED
KINGDOM.
THEN THE SECOND DERIVATIVE WILL
BE THE REST OF EUROPE.
BUT EVEN THERE, THE IMPACT WILL
BE MUCH SMALLER.
BY THE TIME YOU COME TO US, IT
WILL HAVE VERY LITTLE IMPACT.
WHAT PEOPLE WORRY ABOUT IS NOT
BREXIT AS SUCH, IT'S THAT
POLITICS IS NOT CONTAMINATING
ECONOMICS.
THAT'S WHAT PEOPLE ARE SAYING
WHEN THEY SAY WE WORRY ABOUT
BREXIT HERE.
BUT OUR ECONOMY IS FUNDAMENTALLY
SOUND.
WE ARE STILL GOING FORWARD,
POWERED BY THE TAX REFORMS AND
THE DEREGULATION.
LIZ: WELL, LET ME END ON THIS.
WHAT ARE YOU TELLING YOUR
CLIENTS AT ALLIANZ?
WHAT ARE YOU SAYING TO INVEST IN
AT THE MOMENT AND IS IT A
CURRENCY?
IT DOESN'T NECESSARILY HAVE TO
BE A STOCK MARKET OR ANY REGION
IN THE WORLD.
>> WHAT I TELL PEOPLE IS
UNDERSTAND THAT WE HAVE ENTERED
A MUCH MORE VOLATILE PERIOD, AND
THE REASON WHY IT IS IS BECAUSE
THE THREE MAJOR THINGS THAT
DETERMINE STOCK PRICES ARE NO
LONGER ALIGNED, GROWTH,
LIQUIDITY FROM CENTRAL BANKS,
AND TECHNICAL PSYCHOLOGY TO BUY
ON DIPS MENTALITY.
THAT'S GONE.
SO THIS IS GOING TO BE A VERY
VOLATILE ENVIRONMENT.
WE ARE GOING TO SWING PLUS AND
MINUS 10% WITH QUITE A BIT OF
FREQUENCY SO KEEP SOME CASH DRY.
THERE ARE REALLY GOOD COMPANIES
THAT WILL TRADE CHEAPLY AND YOU
HAVE TO BE MORE TACTICAL THAN
YOU HAVE BEEN IN THE PAST.
LIZ: GREAT, GREAT ADVICE.
SOMETHING TELLS ME THIS IS GOING
TO BE ONE OF THE MOST VIEWED
INTERVIEWS ON FOXBUSINESS.COM.
WE WILL PUT UP THE LINK IN JUST
A FEW MINUTES SO YOU CAN WATCH
IT IN CASE YOU MISSED THE TOP
HALF OF IT.
WE KNOW HOW THAT GOES.
THANK YOU SO MUCH.
I'M SORRY ABOUT YOUR JETS.
WHO ARE YOU ROOTING FOR FOR THE
SUPER BOWL?
>> DEFINITELY THE RAMS.
LIZ: ALL RIGHT.