BEING DOWN 397 POINTS RIGHT NOW.
WITH ALL THIS HAPPENING, THERE'S
A NEW POLL OUT FROM GALLUP
SHOWING THAT PRESIDENT TRUMP'S
HANDLING OF THE ECONOMY HAS
TICKED UP TO A NEW HIGH, 53%.
CHARLIE GASPARINO IS HERE ON
THAT AND MORE.
SOMETIMES WE TALK ABOUT FORWARD
LOOKING INDICATORS AND BACKWARD
LOOKING INDICATORS.
>> IT'S KIND OF INTERESTING IN
THE MIDDLE OF A MARKET SELLOFF
PEOPLE ARE GIVING HIM CREDIT
NOW.
LISTEN, THE ECONOMY IS BETTER.
IT HAS TO BE SUSTAINABLE BETTER.
I THINK ONE OF THE PROBLEMS THAT
THE MARKET SORT OF IS
HIGHLIGHTING IS THAT YOU HAD A
CORPORATE TAX CUT IN DECEMBER.
IF YOU LOOK AT THE DOW FROM
ABOUT THE TIME OF THE CORPORATE
TAX CUT TO NOW, IT'S BEEN UP AND
DOWN BUT IT'S ESSENTIALLY FLAT.
WHY IS THAT?
WELL, I THINK TRADE WAS THE
INITIAL FEAR, A TRADE WAR PRICED
INTO THE MARKET SLOWS DOWN THE
ECONOMY, SLOWS DOWN CORPORATE
EARNINGS, BAD FOR STOCKS.
NOW IT'S NOT JUST TRADE, BUT
IT'S INTEREST RATES AND IT'S ONE
OTHER THING WHICH ADDS ON TO THE
INTEREST RATES.
DOES THE CORPORATE TAX CUT
PROVIDE THE BANG FOR THE BUCK
THAT WE NEED IN TERMS OF GDP
GROWTH, SO WE DON'T HAVE MASSIVE
DEFICIT.
CONNELL: IS THE ANSWER NO TO
THAT?
>> IT'S A DEBATE IN THE MARKET.
I DON'T KNOW.
3.5% GROWTH, IF IT'S SUSTAINABLE
IS PRETTY GOOD.
MICK MULVANEY WILL TELL YOU, I
HEARD HIM SAY THIS, THAT WILL
HELP -- HE'S THE BUDGET
DIRECTOR -- THAT WOULD HELP PAY
DOWN THE DEFICIT, WOULD STOP THE
DEFICITS FROM GAPPING OUT WIDE,
BECAUSE YOU PROVIDE ECONOMIC
GROWTH, EARNINGS GROWTH, TAX
GROWTH, THAT BASICALLY PUTS A
STOP ON HOW MANY BONDS WE HAVE
TO SELL TO PLUG THE DEFICIT,
THUS IF YOU -- LESS SUPPLY,
PRICES GO DOWN -- EXCUSE ME,
PRICES GO UP, INTEREST RATES GO
DOWN.
CONNELL: DEBATE BETWEEN GOLDMAN
SACHS AND THE WHITE HOUSE ON ALL
OF THIS, BECAUSE BARNEY HAD
LARRY KUDLOW ON EARLIER ASKING
ABOUT THE GOLDMAN REPORT WHICH
WAS FAIRLY GLOOMY.
ONE OF THE BIG REPORTS WE TALKED
ABOUT IS GOLDMAN IS BASICALLY
SAYING IF THOSE TARIFFS GO FROM
10% TO 25%, THAT'S TROUBLE.
THEY SAID THERE'S LIKE I THINK A
30% RISK OF THEIR DOWNSIDE
SCENARIO WHICH WOULD BE S&P 500
END OF NEXT YEAR, 2500.
BASICALLY DOWN FROM WHERE IT IS
NOW --
>> GOLDMAN SACHS' ECONOMIC
DEPARTMENT IS VERY KEYNESIAN.
THEY AREN'T SUPPLY SIDE.
CONNELL: KUDLOW CALLED IT A
PARTISAN FORECAST.
>> BUT THEY ARE VERY KEYNESIAN
GROUP.
THEY ARE KNOWN TO BE THAT WAY.
ALONG THE LINES OF WALL STREET
RATING AGENCIES, THEY DON'T
THINK TAX CUTS ACTUALLY WORK.
YOU HAVE TO FACTOR THAT INTO THE
EQUATION.
THE REAL QUESTION IS WAS THE
CORPORATE TAX CUT THE WAY TO GO
AS OPPOSED TO A BIGGER
INDIVIDUAL TAX CUT.
I ACTUALLY DON'T LIKE THE FACT
THEY DID A MASSIVE CORPORATE TAX
CUT AND ACTUALLY RAISED TAXES
FOR PEOPLE IN CERTAIN STATES.
CONNELL: I WANT TO TALK ABOUT
POLITICS IN A SECOND BUT ONE
QUICK QUESTION DANIELLE BROUGHT
UP A MOMENT AGO, WHICH IS ISSUES
IN THE CREDIT MARKET.
SHE'S THE FORMER FED OFFICIAL
JUST ON WITH US A FEW MINUTES
AGO.
ISSUES IN THE CREDIT MARKET,
HIGH YIELD AND KIND OF STRESS
AND CREDIT.
ARE YOU HEARING A LOT ABOUT
THIS?
>> WE HEAR THAT IN CORPORATE
BOND -- LISTEN, G.E., FOR
EXAMPLE, IS RATED A COUPLE
NOTCHES ABOVE JUNK BUT BONDS ARE
TRADING LIKE JUNK SO THERE IS A
SORT OF WORRY IN THE MARKET
ABOUT SUPPLY AND THE FACT THAT
CORPORATIONS ARE OVERLY
INDEBTED, THEREFORE, CAN THEY
PAY IT BACK.
REMEMBER, WHEN YOU HAVE INTEREST
RATES THIS LOW, THIS IS
SOMETHING TO KEY ON, I KNOW
TRUMP LIKES LOW INTEREST RATES
AND EVERY PRESIDENT DOES, BY THE
WAY, WHEN INTEREST RATES ARE SO
LOW, IT ENCOURAGES CORPORATIONS
AND PEOPLE TO GO OUT ON THE RISK
SPECTRUM AND BUY BONDS AND
CORPORATIONS TO ISSUE BONDS.
SO THINK ABOUT IT.
NETFLIX UNDER A NORMAL
CIRCUMSTANCE, SHOULD THEY BE
ABLE TO SELL THIS MUCH DEBT, GO
INTO THIS MUCH DEBT WITHOUT A
PROFIT?
IT CREATES BUBBLES AND CHANGES
IN FINANCIAL INCENTIVES.
THAT IS SOMETHING TO WORRY
ABOUT.
CONNELL: SHE WAS LOOKING AT THE
TRIPLE B RATED BONDS.
ALL RIGHT.
I SAID I WANT TO TALK ABOUT
POLITICS.
WE TALKED A LOT RECENTLY ABOUT
MAXINE WATERS AS CHAIR OF THE
FINANCIAL SERVICES COMMITTEE.
WHAT'S NEW THERE?
>> WELL, SOME OF THE STUFF I'M
PICKING UP IS WHAT HER AGENDA
WILL BE.
A LOT OF PEOPLE SAY SHE WANTS
DIVERSITY THROUGHOUT THE
FINANCIAL MARKETS.
I THINK FROM WHAT I HEAR, FROM
MY CAPITOL HILL SOURCES, SHE
WILL FOCUS ON DIVERSE -- BOARD
OF DIRECTORS DIVERSITY.
THAT'S SOMETHING SHE WILL LOOK
AT.
WHETHER SHE HOLDS HEARINGS OR
WHATEVER, NOBODY KNOWS.
BUT THAT'S THE SORT OF SENSE
COMING FROM HER PEOPLE, AT LEAST
TRANSLATED TO PEOPLE ON THE
GROUND, THAT BOARD OF DIRECTOR
DIVERSITY, PARTICULARLY IN THE
AREAS WHERE SHE WILL I GUESS
MONITOR.
CONNELL: NEW RULES, NEW
REQUIREMENTS?
>> I DON'T THINK SHE CAN DO
ANYTHING OUTSIDE OF CALL PEOPLE
TO THE CARPET.
SHE'S GOING TO BE, FROM WHAT I
UNDERSTAND, FOCUSED.
SHE LOOKS FOR CONSTRUCTIVE
RELATIONSHIPS GENERALLY WITH
BANKS AND IF YOU SEE IN THE
PAST, WHEN SHE WAS LIKE IN
LEADERSHIP POSITIONS -- NOT
LEADERSHIP BUT IN THE MAJORITY
IN THE PAST, SHE WASN'T LIKE --
SHE WASN'T A BOMB THROWER WHEN
IT CAME TO ALL THE BIG BANKS.
CONNELL: SO THESE STORIES THAT
ARE MAKING IT OUT TO BE SHE'S
REALLY GOING TO HAMMER THESE
BANKS, A, SHE DOESN'T HAVE THE
AUTHORITY TO DO IT AND B --
>> I THINK SHE WILL BE MORE
FOCUSED.
THE NAMES THAT KEEP COMING UP, I
SAID THIS TO NEIL LAST WEEK, I
SAID IT ON CHARLES, WHEN CHARLES
WAS HOSTING, WELLS FARGO BECAUSE
IT'S A LOCAL BANK WHO SHE
BELIEVES DOES NOT GIVE BACK TO
THE COMMUNITY, PARTICULARLY HER
COMMUNITY OF SOUTH-CENTRAL L.A.
AND THEY HAVE A LOT OF SCANDALS
TO DEAL WITH AND DEUTCHE BANK.
TRUMP'S BANK.
WHEN SHE TALKS ABOUT -- IN
WHEN SHE TALKS ABOUT -- I'M
LOOKING AT FOREIGN INFLUENCE AND
MONEY LAUNDERING, SHE'S REALLY
TALKING ABOUT WAS DEUTCHE BANK
FUNNELING RUSSIAN MONEY TO TRUMP
PROPERTIES IN A MONEY LAUNDERING
EXERCISE.
NOT SAYING IT IS BUT --
CONNELL: TO HER IT'S ALL ABOUT
TRUMP.
>> SHE MAY GET DIVERTED, WHO
KNOWS.
BUT THAT'S WHAT THE AGENDA IS,
WHAT SHE'S SIGNALING RIGHT NOW.