>> MARIA: WELCOME BACK.
TECH TITANS ON WALL STREET AND
THEY ARE TAKING WALL STREET.
AMAZON, MICROSOFT AND NETFLIX
DROVE ALL THE GAINS EARLIER THIS
WEEK.
THIS MORNING, THOSE STOCKS ARE
LOOKING HIGHER AS YOU CAN SEE
THERE.
AMAZON IS KING, ACCOUNTING FOR
27% OF THE S&P 500'S TOTAL GAINS
THIS YEAR.
ACCORDING TO THE WALL STREET
JOURNAL, IT'S THE FRONT PAGE
STORY THIS MORNING.
WE HAVE JOE DORAN JOINING US
THIS MORNING.
TECHNOLOGY, IT'S JUST THREE
NAMES THAT THE JOURNAL ARTICLE
TALKS ABOUT, MICROSOFT, AMAZON
AND NETFLIX TAKING THE GAINS.
WHAT DOES THAT TELL YOU, THAT
THREE NAMES ARE THE DRIVER OF
THE INDEX THAT'S SUPPOSED TO BE
500 STOCKS?
>> WE'VE SEEN THIS BEFORE.
IT SELDOM PLAYS OUT WELL.
YOU WANT TO SEE EVERYBODY
PARTICIPATING, NOT JUST THE
GENERALS.
FIVE NAMES HAVE BEEN DRIVING
EVERYTHING FOR THE LAST SEVERAL
YEARS.
AND SO WHAT I SAY TO PEOPLE IS
WHEN YOU HAVE AN ENVIRONMENT
WHERE IT'S CONCENTRATED IN A FEW
AREAS, YOU DON'T KNOW WHAT GOES
TO TAKE OVER NEXT.
THE ADVANTAGE IS IF YOU'RE IN AN
INDEX, YOU CAPTURED THE GAINS.
YOU WANT TO TRY NOT GUESS WHAT'S
GOING TO HAPPEN NEXT.
WE'LL SEE ROTATION.
I WOULD LIKE TO SEE A BROADENING
OR A ROTATION.
WE'VE SEEN PERIODS WHERE THE
SMALL CAP STOCKS HAVE DONE WELL.
IT DOESN'T SEEM TO SUSTAIN
BECAUSE THERE ARE CROSS-WINDS
THAT ARE HAPPENING.
>> INDIVIDUALS HAVE STAYED OUT
OF THE MARKET UNTIL 2016, 2017.
ARE THEY GOING TO COME REALLY
BACK IN OR IS THIS VOLATILITY
GOING TO HAVE THEM PULL BACK?
>> WE HAVE ALMOST 20,000
CLIENTS, MOST OF THEM
MILLIONAIRES NEXT DOOR.
WHAT WE'VE SEEN WITH ALL OF THEM
IS THERE WAS NO PANIC AT OUGHT
WITH
ATTH
AT ALLWITH THE 10% DECLINE.
I THINK EVERYONE UNDERSTOOD IT
WASN'T REALLY THE MARKET.
IT WAS THE SPY THAT REALLY WENT
DOWN SHALL
DOWN THALL
DOWN THATL
DOWN THAT IS USED BY
INSTITUTIONS.
VANGUARD DID FINE.
IT WAS PANIC SELLING BY
INSTITUTIONS AND THE
QUANTITATIVE TRADERS THAT WERE
GETTING OUT OF THE VOLATILITY
TRADE.
>> MARIA: THAT'S ACCOUNTING FOR
THE 1,000 POINT DECLINE?
>> YES.
>> WHAT WILL CHANGE IT THEN?
WHAT ARE YOU WORRIED ABOUT FROM
HERE ON OUT.
WE TALKED ABOUT RISING INTEREST
RATES AND ALL THOSE THINGS.
>> THE MICRO STORY IS REALLY
GOOD.
WE'RE GOING TO SEE FOR MONTHS
NOW, THE REINVESTING OF MONEY
COMING BACK BECAUSE EARNINGS
PERIOD IS OVER.
I'M MUCH MORE CONCERNED ABOUT
THE MACRO PICTURE.
WE HAVE A RUN-AWAY SPENDING
AGAIN WITH A REPEAT OF THE BUSH
POLICIES OF SPENDING MONEY WE
DON'T HAVE.
ULTIMATELY THAT'S NOT GOOD.
YOU'RE SEEING IT REFLECTED IN
THE DOLLAR.
YOU'RE SEEING IT REFLECTED IN
INTEREST RATES.
AND IF INTEREST RATES GO UP,
IT'S NOT SO MUCH THAT PEOPLE
WON'T INVEST IN STOCKS, IT'S
THAT IT MAKES STOCKS MORE
EXPENSIVE IN A RELATIVE SENSE.
THE BIGGEST CONCERN I SEE IS IF
WE END UP HAVING A SLOWDOWN IN
THE SECOND HALF OF THE YEAR,
WHICH IS NOT UNLIKELY AFTER ALL
THIS MONEY HAS BEEN PUT TO WORK,
THAT COULD BE A PROBLEM BECAUSE
WE DON'T HAVE THE MONEY TO PUT
IT BACK TO WORK.
>> MARIA: WE TALK ABOUT THAT
EVERY MORNING.
THERE'S A JOURNAL OP ED, WHY
AMERICA IS GOING BROKE.
I FEEL LIKE WE COULD HAVE
WRITTEN IT.
THAT'S ALL WE TALK ABOUT.
>> DAGEN: THERE'S CONCERN ABOUT
THAT.
EVEN BASIC CONCERNS, SOMETHING
THAT STEPHANIE BROUGHT UP AND
GOLDMAN SACHS HAS DONE THE
RESEARCH TOO, THAT A SUSTAINED
DECLINE -- STEPHANIE THINKS OF
EVEN 10% WIPES OUT THE ECONOMIC
BENEFIT OF THE TAX CUT WHICH
WOULD BE -- GOLDMAN SACHS PUTS
IT AT MORE LIKE 20%, BUT
NEVERTHELESS, THAT DOES HAVE AN
IMPACT ON WELT
IMPACT ON WEAT
IMPACT ON WEALTH IN THIS
COUNTRY.
>> I'M VERY MUCH A FISCAL
CONSERVATIVE.
THERE'S NO VOICE NOW FOR SAYING
WE'VE GOT TO APPLY THE SAME
RULES FOR THE GOVERNMENT THAT WE
APPLY AS INDIVIDUALS.
INDIVIDUALS UNDERSTAND I CAN'T
SPEND EVERYTHING I'M GOING TO
HAVE IN THE FUTURE.
IT HAS IMPLICATIONS.
THE GOOD NEWS IS IF YOU INVEST
IN EMERGING MARKETS OR GLOBAL
STOCKS, THEY BENEFIT FROM OUR
DOLLAR GOING DOWN.
THEY BRING BACK THEIR EARNINGS
NOW BECAUSE OF THE TAX RATES AT
HIGHLY APPRECIATED VALUE.
>> MARIA: THAT'S WHY IT'S GOOD
FOR TRADE.
>> IT IS.
AND IT'S GOOD FOR STOCKS HERE IN
THE U.S.
>> IT DIDN'T HAVE A HAPPY ENDING
IN THE LAST DECADE WHEN BUSH
WEAKENED -- THE BUSH
ADMINISTRATION WEAKENED THE
DOLLAR.
THAT LED TO A FALSE COMMODITIES
BOOM AND FUELED THE HOUSING BOOM
AND WE SAW WHAT HAPPENED IN
2008.
WHAT'S PREVENTING THAT FROM
HAPPENING AGAIN.
EVERY TIME WE HAVE A SUSTAINED
WEAKENING OF THE DOLLAR IT HAS A
BAD END.
>> WE DON'T HAVE THE BANK
BALANCE SHEET ISSUES WE HAD
THEN.
SOMETHING WILL POP UP.
IN THE MEANTIME, I THINK WHAT
YOU SHOULD EXPECT WITH
EVERYTHING HAPPENING WITH THE
MACRO PICTURE IS YOU'LL HAVE
INCREASED VOLATILITY.
AS INTEREST RATES GO UP, AS THE
FED STEPS BACK, THE BIGGEST
THING WAS THEY DROVE UP
VALUATIONS FOR ASSETS AND DROVE
DOWN VOLATILITY.
WE'VE NEVER IN THE HISTORY OF
WITHOUT A 5% DECLINE.
IT WAS THE BEST OF TIMES.
>> MARIA: EARNINGS ARE UP 20%,
ECONOMIC GROWTH OF 3%, WOULDN'T
THE DOLLAR GO UP ON THAT?
>> DEPENDS ON WHAT THE FED AND
THE TREASURY DOES.
YOU CAN HAVE A STRONG ECONOMY
AND WRECK YOUR CURRENCY AND VICE
VERSA.
YOU CAN HAVE A PUNK ECONOMY AND
STILL HAVE A GOOD CURRENCY.
>> THAT'S WHAT I GET CONCERNED
ABOUT.
WE SHOULD BE WITH WHAT'S
HAPPENING WITH THE MICRO PICTURE
AND WHAT'S HAPPENING WITH
COMPANIES, WE SHOULD SEE THE
OPPOSITE OF WHAT WE'RE SEEING.
WE SHOULD SEE THE DOLLAR
STRENGTHENING.
>> MARIA: YOU THINK IT'S THE
SPENDING?
>> IT'S THE SPENDING.
>> DON'T YOU THINK IF THE
TREASURY SECRETARY FLAGLATED
HIMSELF AND SAID WE WANT A
STRONG AND STABLE DOLLAR, THAT
WOULD BE GOOD, BRINGING MONEY TO
THE U.S.?
>> I DON'T THINK HE HAS TO DO
ANYTHING.
HE JUST HAS TO SAY IT.
TYPICALLY WHAT THEY WILL SAY IS
ENOUGH, AT LEAST PUT ON A
FACADE.
>> EVEN WHEN THE POLICY'S NOT
THERE.
>> MARIA: THAT'S THE THING.
EVERY ADMINISTRATION SAYS IT
BEFORE THIS BUT THEY DON'T
REALLY MEAN IT.
>> THE MARKET KNOWS.
CERTAIN WORDS YOU SAY --
>> MARIA: HE JUST WAS HONEST.
>> YOU WANT A STRONGER DOLLAR.
THE MARKETS KNOW YOU REALLY ARE
FIBBING.
HIS SIN WAS HE SAID --
>> MARIA: HE WAS HONEST.
>> THAT'S RIGHT.
SOME HONESTY BUT NOT TOO MUCH
HONESTY.
>> MARIA: YOU'RE EXPECTING A
DECLINE IN THIS MARKET, THOUGH?
>> I THINK WE'LL SEE A 10 TO 15%
DECLINE, PROBABLY IN THE FALL,
SUMMER.
I THINK THERE'S TOO MUCH BACK
SPIN AND TOO MUCH SUPPORT FOR
WHAT'S HAPPENING IN MICRO
COMPANIES, TOO MUCH MONEY
POURING BACK INTO STOCKS,
COMPANIES BUYING BACK THEIR OWN
STOCKS.
I THINK WE'LL SEE THE NEXT HE
DECLINE WILL BE A NORMAL MARKET
DECLINE, IT WON'T BE LED BY
TECHNICIANS, IT WILL BE
FUNDAMENTALS THAT ADJUST.
I THINK WE'RE IN A BULLISH
TREND.
I DON'T THINK ANYONE SHOULD TRY