tv Washington Journal Roben Farzad CSPAN February 11, 2018 1:42pm-2:12pm EST
special correspondent and host of disclosure on national public radio. thank you for being here. in the washington post, that face says it all, for photographs of an investor on wall street after a crazy week. what happened? guest: it is such a workshop question, what happened? i remember that we always scrambled every time markets crashed and you try to find an answer. any economics professor would give you any variety of answers. the market has run up quite a bit and we have gone up without a routine, 5% connection. in january, it started out of the gates with markets in the united states shooting up 7% higher. that cuts both ways, when you run up that much, balances selloff in an accelerated fashion. host: this is a correction? guest: 10%? yes, we did break the 10% mark.
a standard definition of a bear market is 20% trade we even had a half correction in 2016, and memories are short on wall street. let's not forget we are nearing in 2008,ar anniversary when stocks were cut by 40%. people forget volatility happened. was in thearney washington post saying there was a reason why during his 18 years in the white house, barack obama never touted the stock market because what goes up will come down. the president has talked about the stock market a lot until the past week. to own the downturn it is sbc not to own the downturn? guest: it is interesting. it is a tricky thing for any president to take credit for the
stock market or george w. bush market,vervalued stock a recession, 9/11. barack obama is soaring in stocks in a 20 year low. it is a tricky thing. he could have taken a victory lap when he was done, barack obama, and succumb my stock market was better than ronald reagan, but it is still looked at the province of elite, even though more people have exposure to stocks and in their retirement plans. as a jobto be seen creator and tax cutter, not speaking the language of equities. host: this is an interesting chart that looks at the united states and the darker the color, the darker orange, the more investors in the stock market rate the lighter the color, including nevada and mississippi, the smaller number based on population, investors in the stock market area leading -- market. leading the list, ohio, new
york, and a soda, new jersey, vermont, washington, d.c., oregon, washington, montana, all heavy ownership in the stock market. texas,ighter in florida, arizona, and california. guest: i mean, ownership calls for, you could say in the blue state regions that have big fortune 500 companies, financial firms prioritize equity sharing and 401(k)s and stop ownerships. you do not see that as much in small business and agriculture and the industrial world. you still have companies in the rust belt with you find benefit pension plans and education plans as the province of 401(k), so it is an even across the country. having said that, i have not been buttonholed by anybody about the stock market since early 2000. when i think it was making a
cnbc wasthe sopranos, on the late show. the equity culture has not hit that, even though we had a dow at 25,000. stocks of tripled since the low in 2009. trillions and trillions of market and valuation at it. host: we are dividing our phone lines differently with roben farzad. if you are an investor in the stock market, called (202)-748-8000. for all others, (202)-748-8001. the other issues we have been talking about, the 300 and dollar increase in spending. the tax cuts, and no plans for infrastructure spending, what does this mean for the debt and deficit? guest: put it on the top. -- put it on the tab. host: who pays for it? guest: the future, foreign
investors, and they make you pay for your profligacy. you have estimates that this estimate can approach 105% of gdp in 2027, unsustainable, but sustainable if you have american exceptionalism. it was talked about earlier, the chinese buys our debt voraciously. they are looking for any yields and they this fortunately put their money in u.s. treasuries, the gold standard are you there is a school of thought when you talk to people in the trump administration and treasury. steve bannon, the former advisor has been on the record. if you get that benefit of the doubt, use and spend that money and banking on infrastructure and things the generations can enjoy. host: all investments so you need to diversify, and your career is diversified. in this book, hotel scarface: the cocaine cowboys partied and
plotted to control miami, what is it about? guest: it is a love letter to my hometown. before i left the college up north, i found an abandoned property south of miami, and it was an infamous address in miami that was central to the cocaine wars in the late 70's and early 1980's. it was where three generations of cuban mafia competed for control of the cocaine trade. it inspired several aspects in the movie scarface, miami vice, and characters and producers frequented the place, where art meets life, and they started gaping at one another. i spent 20 years interviewing the dopers, secret agents, spies, hitmen, people who work there, and it debuted in mid-october. host: where is it going? guest: we have a deal with stone village entertainment to pursue
a premium cable series that gives us more room to unpack. i was under pressure to produce a kilo size nonfiction film, and some sort of treatment on television, where we can unpack characters and go into what was left on the cutting room floor and it excites me. i will spend much of the year pursuing that. host: tom is joining us from connecticut. that ifi always thought you drop below the 200 day moving average, you were in a bear market. the second point -- host: on the first point, he will get a response. guest: i have not heard that, that might be a technician's definition of a bear market. the more standard definition is a 20% drop from a high. the 20% trigger is their market, 10% is correction. there is more method in this. there is a lot of wiggle room for interpretation.
host: when the market dropped over 1100 points last monday, it was the biggest one-day drop. percentagewise, it was a couple of her sense because the markets have moved all over. guest: a fat asterisk when you see the market has dropped. compared totoday 1000 points in 1987, if you look at a chart come of that was the entire stock market. today, it is a percentage of any 5000 dow. it is a trickle. we have had, i believe we saw a stack elsewhere that said 36 corrections since 1980. at least 10% moves from the height. it is routine, and what stood out was the fact we had an ad with a selloff and shedding in 404 days. host: tom, you wanted to follow up? downs inou have spiked bull markets and spike upson bear markets. in bear markets.
this man produces economic topic reports for television. i would like to see somebody talk to some of the people getting the crohn's. if you are making $22,000 a year, and you have expenses of 20,000, which a lot of people in the low-end of the wrong end have, and you have two kids, this thing, you double the expendable income you have. if all you have is $2000 a year to spend and get a cup of coffee with a friend at starbucks, or whatever, to double that money is more than crohn's to a lot of s to a lot of people, and i would like to see one of these economic reporters talk to the people who are actually getting, being able to take
advantage of the new tax code. host: thank you. look, we saw a curious intersection of these headlines. said earlier, when you saw wage pressures come in higher than expected, and the conflict of that, which should be great news with a record high bull market, you get a major reaction, where this will give the fed chair ammo to hike rates faster. and sooner. that is where, if you look at the headlines, they just increased the wages of hourly workers at cvs, phillip morris is giving it tax cut bonus to employees, and this terror certain extent, if you are a market investor, you want people to have consumer confidence. it is cynical and selfish.
you do not wanted to be so hot it causes a spiral, where people keep asking for wage hikes and companies pass the cost in their products. the likes of which we have not seen since the 1970's and 1980's. points, theas this stock market is only perfect calves. a small guy can't be wiped out with little corrections. i believe it is planned this way. guest: i do not buy that, with all due respect. paper losses. if you pay attention to these, are the minutes, by the hour, especially if you are near retirement, we see time and again, and of course, there's no guarantee with this, it is a ause that refreshes it with new high and it is an opportunity to buy things on sale. one investor said, markets without sellouts are like christianity without hell. it is hard to go out there and
teach what has to be taught about it. if markets kept going up, there would be no other side of the trade and everybody would pile into that. is our guest,rzad the host of full disclosure on national public radio, how can people follow you on twitter? guest: you can follow me at -- @robenfarzad. tweets,is is another labor is the source of all wealth, but the gop would have us believe it only comes from the rich. let's go to daniel and virginia. caller: good morning. i would like to hear his thoughts on serious entitlement reform, with that hurt or help the market? thank you. host: thank you, sir. thet: the question is, what price tag would be, especially now that we are clenching into deficits going on five years or 10 years? there is a lot of uncertainty about medicaid, medicare, social
security, the indexing of these things, especially if inflation became more permissive. you have more progressive costs of living, should we float the idea of a higher retirement age, i think it really, like i said before, it cuts both ways. if you are a person depending on that in the time of fixed income, you depended on that long time, so that the government to come in, it would have to be done cautiously and tapered end in a measured manner, especially few have record numbers of host: baby boomers approaching retirement and banking on it. from connecticut, max is our next caller. caller: to our particular my call. i wanted to pick up on your comment to this being a paper loss for most people. i have contribution through work, and my wife and i also have something for our children
with a college savings plan, and i'm not concerned about this drop. i think it will ride out and i have no concern. guest: if only everybody was like that because it feels different. it really does. as cliche as it sounds, i remember i was at his this week, when stocks it a generational low in march of 2009, and people were tapping on my window saying, what is going on? i remember a couple saying, you are young, kid. my mother talked to me about the depression. the most cold eyed people on wall street say that is resized for what you should buy, but it is hard to do. what if it is like catching a falling knife? what if this is finally the big one? you never know. that is the dance that you have with mr. and mrs. market. if it were guaranteed, if there was a backstop from the fdic, you are not getting paid for risk. you have to take on risk to get
returned, especially in this yield world. you: you write books, invest, and you do imitations. guest: [laughter] yes. host: if you take two thirds of the budget, medicaid, medicare, social security, and defense, lawmakers have agreed to increase defense spending. if you bring down the debt and deficit, it will have to come from the entitlement program. what will congress to? guest: [laughter] not in an election year. i do not mean to sound cynical. host: derailed the retirement age? guest: you know how much hell? hellu know how much would be raised for increasing the retirement age? likeif we have surpluses, in 2000, you are facing a ticking time bomb actuarially
and demographically. that is a pill people will have to face. what if we do not have this economic environment and we have to face that? what if we are talking about a deep economic recession and people cannot afford to find work at that age? if you unpack and employment numbers now, it is harder for older people to find productive income that they banked on. there is a lot in the way of freelancing, making it up and it areget to to age 65. many increasingly seen 70, 75. i'm curious to see how they unpack that, but i'm airing it anecdotally. host: what about the taxon social security? at a certainap out amounts, and for those who make more, what will that be? guest: that would be an interesting test. if you see a compromise, i do not know if it happens. i am staring at the great dome.
people say, we have to do this for the sake of our country. i do not know if there was enough focus on bipartisanship for people to come together. if i take it out of your heart, in terms of increasing the benefit and distribution age, you will have to follow on a means testing this more, and taxing people into several of hundreds of thousands of dollars if they enjoyed in easier retirements. host: the book is called "hotel scarface: where cowboys plotted to control miami." jobs, theking about economy and the stock market. scott is from new york, and investor. good morning. caller: good morning. how are you question host: fine, -- how are you? host: fine, thank you. caller: i'm a stock owner but have clients in entertainment. when the new tax law passed, we
had them passed through entities because they had so many business productions no longer of use. one side effect is they would be able to contribute to fire a with higher limits. we have been talking and people are scared they will be stuck with possibly a higher tax that they do not want to contribute, even though they know it might be the only retirement they had. do you think there are people who will be this incentivized from saving ahead, it even though that may be the only way they can? guest: that is a good point. it is great for cpas and tax prep people because there is so much confusion. this tax plan, and this huge measure of tax form, the biggest change in's 1986, it was done so rapidly and without so much in the way of consultations that i think so many taxpayers, especially escort-tech people,
and people like me, and ownnalists, who own our businesses, are confused about how to better protect income or better bank it in the future to avail ourselves of some benefits i think disproportionately order several of hundreds of thousands of dollars a year and are confused about it. when i worked for a big employer, i would chip in to my 401(k), avail myself of the match, now i'm confused between the roth ira and rock 401(k). -- roth 401(k). going to guarantee that when i turn 65 that i am going to be able to take my tax rate withdrawals? is a lot of confusion about it. host: there is this tweet, are we heading for a shallow or deep recession? guest: there's no way of knowing. never get enough of the
federal open market committee, no, this is not exactly must see, but if you go to the federal reserve website, look at these dedicated economist in 2006 and 2007 completely oblivious to the fact that this massive disaster was coming down the pipeline. it is slowing down in certain regions, but we are keeping rates and policy where it is. it is not some kind of systemic collapse on wall street. i am amazed some of the economists missed that and had to deal with that as banks were failing and interest rates and an emergency increments. if you pull 10 economists, you might get different prognoses. cyclicalitythat happens. if you are talking the economy and markets, we have had a bull market for most of the time since 2000 nine. there was a big correction in 2011. we had hiccups in europe, the
economy has expanded since when the recession ended in 2009. you can macro manage that if you are the federal reserve. you do not want it to get too low or high, and crash the wall. pureme point, i think supply and demand an economic activity has to take a breather. host: which is a challenge for jerome powell. guest: yeah, i do not envy that area janet yellen -- that. janet yellen locked down in a way, not that it was easy, but she did not have a crash on her watch. she was not crisis tested the weight ben bernanke was. to hand the keys to jerome powell while the market is falling in thousand point increments is interesting. host: from indiana, good morning. caller: good morning on a sunday. holy christian sunday.
i wanted to get your thoughts on compatibility of christianity and capitalism. luke 16-13, you cannot serve god and money, for if you stand for the love of money is the root of all evil. the military industrial complex that eisenhower warned against, will bankrupt america, with united technologies, uh christian values, we cannot pray on it today for america first and send it, probably something we should have done a long time ago. , ist: i was bar mitzvahed need some help on this. compatibility is always the question. i brought to mind another business week feature, the mormon church in the united states, the church of latter day saints, exceedingly successful financially and economically, and practices a compatibility of capitalist ethics, with their
version of christianity. if you look at it politically right now, the christian right the tax planwith on capitol hill. i do not see that much in the way of protest when we talked about cutting emergency child health care benefits in order to sustain the status quo. up in the air. you will see a lot of commentary come out of it in the weeks leading up to the midterm elections. host: full disclosure on national public radio focuses on investing in finance and world affairs and the economy. he is seen on cbs news hour. from illinois, good morning. caller: hello. host: you are on-air. caller: to the last guy who called, i would like to say, remember, money is a doer of all good, too. good for a lot of people. my fingers, what gets me is the fact that the economists never
talk about how we evolve into a seemingly narrow path of economics, which is the stock market. it kills me the guys who they in 1959, theke guys who lost so much money in age, weet, at that should not even be in the market like that for the most part. 20%, but most of the money should be in a low bearing interest farm, where you have service coming to you. it just amazes the heck out of me that we pursue emphasis on the stock market and it is volatile. direction to me is another word for you lost. let me get your response. remember, money is the doer of all evil but it does a lot of good, too. host: thank you. guest: i think more of us should shed tears for the sabres in this country, called financial
repression. the federal reserve took rates to nothing, and banks still think they are doing you a favor with cash. you want to open this, i might give you 1%. that is not what so many people in this country expected, my parents included. save your money, invest your money, and as you get older, you expect to get a decent return over fixed income. that is nonexistent. i think it is a big problem. it speaks back to capital versus labor. if you are a holder of capital, equities, real estate, real estate investments, trust, art, things that can have capital gains tallied on them, you have been so well in this bail out, and the fed' his campaign. if you are a person dependent on wage earnings, and try to save every dollar that you can above
your earnings, it is only recently coming to hit new that you may be able to ask for a raise. it is overwhelmingly tilted towards capital holders and investors an asset holders. host: the gallup organization is looking at the percentage of americans who own stocks you can see a decline from 2009 to 2017. 54% at the previous period, and now at 62% previously. -- 54% now. at the previous period, 62%. caller: what i'm hearing from mr. farzad is more of a mathematical analysis of the market that we have known historically. weever, we are aware that are reaching historical changes in the markets. the speed of change, up and down is historical. it has never happened before, so
how can we use the same myhematical analysis and postulation is perhaps it is cyber war, and russia has shown us computers can be hacked. computers now, not people. host: thank you. guest: institutions control this market on behalf of investors. i think for all the talks of christianity and judaism, when it comes to personal finance, i am devout agnostic and i cannot tell you what will happen. i cannot tell you i need to own a piece of everything and in terms of bonds, stocks, real estate, you name it, at the lowest possible price, and sit back and keep my cost basis low end rebalance and diversified. i know you he to be told to drink your milk and do push-ups and stay in school, but that is
the best we can do. farzad, he has his latest c-span's washington journal, live every day with news and policy issues that impact you. coming up monday morning we take a look at the week ahead with waiters white house correspondent and paul singer. we also discuss efforts to lower prescription drug prices with david mitchell. liven's washington journal beginning 7 a.m. eastern on monday morning. join the discussion. nopresident trump was in a -- was in ohio last week to discuss tax reforms and what he views as positive signs for the economy. he also