tv Maria Bartiromos Wall Street FOX Business July 20, 2019 3:00am-3:30am EDT
"strange inheritance." and remember -- you can't take it with you. right? i'm going to be in trouble for saying that. [inaudible conversations] trish: thank you so much. maria bartiromo's next. >> from the fox studios in new york city, this is maria bartiromo's "wall street." maria: happy weekend, everyone. welcome to program that analyzes the week that was and helps position you for the week ahead. i'm maria bartiromo. coming up in just a few moments, sam zell is my special guest. we're talking real estate and the economy and interest rates and a lot more coming up. but first, earnings season is underway with america's largest banks leading the second quarter reports this past week. goldman sachs, jpmorgan, citigroup all beating expectations on the top and bottom lines while bank of america matched revenue expectations. there are concerns over lower
interest rates, that did dampen profits, but that certainly helped markets overall trade up. joining me now to look back and ahead is the founder of pointview wealth management and the president, david dietz with $400 million in assets under management. it's great to have you. this week i feel like it was a lot about the federal reserve. on friday you had the president of the new york fed saying, what did he say, let's prevent -- an ounce of prevention is better than getting behind. so he was advocating a 50 basis point cut in the rate from the fed in two weeks. what's your take on what went on this week? >> well, certainly, i think the fed is the number one story, of course, despite it was the start of earnings week, and the question is will they or won't they next week in terms of a rate cut, and if they do, how much. we're kind of getting baked in for a quarter point cut, but then, you know, williams came out yesterday and talked about when you have very little gun
powder, use it off quickly. shock and awe or a pound of prevention can help immune nice us from what's going on overseas. the 50-point basis cut is in the market, and markets are responding positively. maria: i know. but then the new york fed tried to walk back the comments, oh, he wasn't talking about july 30, but there's a chance now. >> certainly those chances have raised considerably. obviously, some people are upset he kind of front-run the meeting, so we really don't know, but it does set a positive tone as we ended this market week. maria: yeah. but, david, i feel like if the fed cuts 50 basis points, you have to say to yourself what do you know that i don't know. here we are talking about an economy with very strong numbers, better than 3% growth in the first quarter, unemployment at a 51-year low. if they cut by that much, will that concern you? >> of course it's going to concern us. i think it's all about the messaging, and i think they're
going to have to walk a fine line saying the u.s. consumer is holding up the rest of the world. unemployment rates very, very low, retail spending is great. we may actually see some good manufacturing numbers, but we don't know about is what ails the rest of the world, and we're seeing very sluggish economy, will that wash ashore here and why not cut rates now so as to immunize us. maria: let's zero in on earnings. by the way, you've got the fed meeting on the 30th and 31st, next week you've got ten dow components reporting earnings, and in addition to the fed meeting, that's also the date of the pmis, the purchasing managers indexes. and that's where we first figured out there was a weakness in manufacturing. microsoft is the stock that you mentioned before we came on the air. was this reflective of microsoft and leadership, or was this reflective of an earnings period that's not as bad as all the
doomsayers predicted? >> i think it's both. when you have the largest company by market cap on the planet coming out with double-digit re knew increase, profits, that's got to set a positive tone because they can't do it without a lot of demand out there. on the other hand, i tip my hat, he has positioned microsoft so they're breathing down the backs of amazon in terms of the cloud offering, going gang busters, they're also pioneering and making money hand over fist with converting people from buying one-time, perpetual licensure software to converting it into software as a service, they're coining money as far as the eye can see. that cheers investors and finally, of course, they've got that monopoly in office 365. they're skillful in terms of the way their positioning is, no one in congress is beating them up, and it's a sticky product, so that bodes well. maria: sort of been there, done that, right? they were the target of antitrust and everybody else in government back in the '90s. look, you didn't see the kind of
performance at sap, you didn't see the kind of performance elsewhere, maybe oracle. microsoft really did -- >> well, that's the story. but what i like about any della is he's no drama, he's not making provocative acquisitions like food stores that are outside their traditional business, you know? he's not going out and trying to come up with brand new currencies which are raising the ire of regulators. he's staying focused, and i think that bolds well for microsoft and should be a good example for the rest of the companies out there. maria: so look ahead to next week, the ten dow components. you mentioned starbucks is another one in the upcoming week, but give me your sense of the second quarter earnings season. i know it's only week one, but going into this period a lot of doomsday sayiers saying earnings are going to be down for the s&p 500. are they beating the lowered estimates? >> yes, they are. you know, we were coming into this earnings season with basically flatline expectations,
and now those are starting to creep up. and i think there's several themes out there. one of the themes which was reflected well when the large banks reported is if you are consumer-focused, you are doing well. the u.s. consumer have jobs, they're optimistic about their economic life, and, you know, the mortgages and the credit card business doing well. but to extent that you're focused or exposed to the global economy, there is more volatility. trading revenues was down. so i think you're going to see that going forward, those companies which are consumer-oriented like starbucks are bound to do well. csx, for example, which are exposed to the vagaries of the global economy, they missed expectations last week because of concerns over the trade with china. you know, need to be cautious about those names. maria: so you think the consumer's getting stronger right here? >> yeah, i do. because i think that there's still more people coming into the work force coming off the bench who actually weren't looking for a job. inflation's staying low, so they're not facing higher prices, gas prices are stay
thing low, so i think that's a positive. maria: great to have you on the program. david dietz joining us. don't go anywhere, my interview with sam zell is next. more "wall street" coming up. ♪ ♪ >> the economy keeps chugging along, but is the inevitable slowdown around the corner? the real estate titan sam zell doesn't seem to think so. >> all i know is i keep looking for problems and having trouble finding them. >> he lays it out when "wall street" returns. ♪
maria: welcome back. with the u.s. experiencing its longest economic expansion in history, some investors are starting to fear that we could be due for a slowdown just because it's more than ten years. real estate is one key area that investors and the federal reserve pay close attention to. joining me right now is a titan in the industry, one of the most respected real estate tycoons in the world, sam zell. it's great to have you. thank you so much for being here this weekend, and i want you to give us your 30,000-feet assessment of the economy. here we are talking about a federal reserve that's going to cut rates in two weeks, and yet things feel pretty good. >> yeah. you know, they say that the stock market goes up on a wall of worry. everybody's worried about ten years. i thought it was the interesting to think about the fact that maybe it's not ten years, maybe it's only five years. if you look at the real estate business, march of '09 was the bottom of the stock market, but
march of '09 was not the bottom of the real estate market. that didn't happen til four or five years later. so i don't know when it began and i don't know when it ended. all i know is i keep looking for problems and having trouble finding them. maria: but you have been an incredible, i don't know, i don't know if you mean to be a timer of cycles, but you really call cycles. i mean, when you made that huge sale at the top selling to steve shah wartzman, people thought this guy's brilliant. he knew exactly when things were about to turn. >> if i really knew, i'd be rich. [laughter] maria: so you don't see signs that we're about to slow down in a considerable way. >> just the opposite. i mean, i want to see signs because my logic says it should be time. but i think that the overall change in the environment since 2016, i think, has changed how
we value or evaluate the system. i had a conversation the other day with someone in a very regulated industry, and i said, you know, how is the world different? and he said for eight years we spent all of our time talking to regulator about how much the fine was going to be. since that time we spend all of our time talking with the regulator on how to avoid a fine. that's enormous change emotionally in the decision making process of executives in the business community. if they don't think that they're the target anymore or the only target, they have a very different perception of risk. maria: this is a really important point that you're making because we have a president right now that is a business president and somebody who's definitely focused on the markets. so a lot of times i say to some of the market people that come on you're not really worried, are you, because you think president trump's going to do
everything he can to keep the economy up and the stock market up. that's what a business president does. under president obama we had all these rules and regulations, companies sat on cash. >> sure. well, the bottom line i think is that the obama administration was about redistribution. maria: right. >> the trump administration is about growth. i think after eight years we learned that redistribution doesn't work and that our system is not built to deal with redistribution. it's built to deal with growth. and i think that the change from redistribution of growth is what's really going on in the markets. maria: this is such an important point. and i want to get more into this later on in our interview when we talk a little bit about what's going on in terms of the politics, because i don't know that certain congresswomen and congressmen understand the narrative of growth versus
redistribution. but let me stay on the real estate market and interest rates, because in two weeks we're expecting the fed to cut rates as high as 50 basis points. what is that going to mean to the reality market and the economy, in your view, when we see rates coming down? already we're talking about rock bottom rates. >> yeah. i think that rates coming down is likely to have minimal effect. i don't know, i'm not a big fan of very cheap interest rates. and, frankly, i think that a perpetual period of interest rates that are suppressed below the inflation rate are, frankly, very dangerous. dangerous from an inflationary point of view because if you suppress it, it comes back. but they're dangerous also from extracting from the economy a sense of urgency. we need a sense of urgency. we need a reason to make decisions. we need a reason to take risks.
the lower the rate, the lower the reason to create that sense of urgency. and that's not healthy for our economy. maria: let's take a short break. when we come back, sam's going to give us his outlook for the second half of the year. we've got a lot more to discuss after this quick break. stay with us. ♪ ♪ >> sam zell's investments have made him billions, so where's his next billion coming from? >> as an investor, you're >> as an investor, you're focused by definit can't see what it is yet.re? what is that? that's a blazer? that's a chevy blazer? aww, this is dope. this thing is beautiful. i love the lights. oh man, it's got a mean face on it. it looks like a piece of candy. look at the interior. this is nice. this is my sexy mom car. i would feel like a cool dad. it's just really chic. i love this thing. it's gorgeous.
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investments, real estate billionaire investor and has been for so long, and that's why really i want to get your take on what you're expecting for the second half of the year, sam. i know you have not been an investor in europe before. tell me about that, why. would you look at europe? what about the u.s. right now. >> yeah. we've never been -- we've never found europe very attractive. as an invest ifer -- investor, your focus by definition is where is the demand. you look at the 30 some odd countries of europe, over half of them are demographically negative; less people at the end of the year than the beginning. by definition, to me anyway, that means there's less demand. so that plus the fact that i think europe has been a welfare state for so long that i don't think they know how to not be one. maria: yeah. >> and so i think it's a place where i want to go to eat food and wine, castles -- [laughter] ride my motorcycle.
maria: not putting much money there. yeah, because europe has had a really hard time generating any growth. here in the u.s. we got 3% in the first quarter and, i don't know, second half of the year looks okay. what about the u.s.? >> i think the, you know, i've been, you know, i've been worried about the u.s. just by virtue of the fact that it's been a long time of positive numbers -- maria: and we're all talking ourselves into it. >> on the other hand -- [laughter] you know, as i said before, you know, the stock market goes up on a wall of worry. so everybody's worried, and it's very rare that we have a crisis when everybody's worried. we only have crisis when everybody isn't worried, and we get blindsided. i think the u.s. is better than conventional wisdom suggests. it's not burning up. i think the real estate segment, commercial real estate continues to be benign.
moving more supply on the opposite side e that i would be concerned about and i think probably, you know, we still have not -- we're a long way from any resolution on retail. maria: you have also invested in waste, waste companies. >> yes. maria: when's the attraction there, sam -- what's the attraction there, sam? >> well, first of all, everything i do is oriented towards supply and demand. so we're the largest owner of a company called covanta, waste energy facilities in the world. what we're doing is we're burning garbage and creating electricity. we're also replacing landfills that are being eliminated worldwide because they figured out they're economically ine sane. maria: fascinating. >> and last time i checked, there wasn't going to be a shortage of waste. so that, from our perspective, made sense. and we also invested in the collections side, because that's an area where there's a roll-up
going on, and we're getting bigger and bigger companies as opposed to ma and pa that in the old days dominated the industry. maria: so does the market feel like it's trading the way it should be given the backdrop? i mean, you've seen this weekend very bullish on an economy that keeps on growing, that we keep seeing opportunity even if we are going to see a rate cut which seems to be in the bag, is the market justified where it is, in your view, or do you think we're in for a pretty good selloff here? >> well, the answer is i don't know. maria: i know. >> i wish i knew. maria: what's your gut? >> my gut says that the market is more bifurcated than capable of being described as remarkable. the pricing of a lot of these high-tech things, i'm not smart enough to understand, and i don't understand what multiple you put on a company that's
losing $4 billion a year. i just don't understand it. i guess i have to go back to school -- [laughter] and somebody has to teach me. matt:ices again. -- mathematics again. on the other side, we have numerous companies that are trading at what i think are very attractive prices that are the in, quote-unquote, out of favor industries. so as a result, i end up investing in out of favor industries. i mean, like right now i think that almost all discretionary capital other than from the big companies has disappeared from the -- [inaudible] and we've gone from enormous oversupply of capital to an enormous shortage of capital. which is creating some very interesting opportunities that weren't there two years ago. maria: are these the energy producers, or are these the service companies? >> these are the energy producers who have spent an awful lot of money over the
last, you know, ten years developing, you know, sites and now don't have the money to complete those sites because, basically, the oil industry has not been returning its cost in capital. now, there's only one other industry in history that i know of that over a very long period of time has not produced its cost to capital, and that's the airline industry. and, you know, i think the oil industry, oil, gas, etc., has to adjust to reflect the cost of capital justification. maria: would you look at the large ones? >> well, the big ones have the independent bank network and balance sheet where they're not short of capital. it's the independents and the smaller ones that have literally been shut off. maria: really great advice, sam, as always.
maria: welcome back. coming up next weekend on the program, home depot cofounder and billionaire philanthropist ken land gone is my potential guest. we'll also talk with the president of nyu-langone. next weekend right here. i'll see you sunday morning on the fox news channel for "sunday morning futures." my special guest, the bank of america ceo brian moynihan along with white house trade adviser peter navarro, don't miss it sunday, live, fox news, 10 a.m.
eastern. plus, right here on fox business, tune in weekdays from 6-9 a.m. eastern for "mornings with maria" right here on fox business. we hope you'll start your day that'll do it for us for this weekend. thanks so much for joining me, i'll see you again next time. have a great weekend, everybody. ♪ ♪ gerry: hello and welcome to "wall street journal at large." well, no issue in america's long history as fraught with tension as the issue of race. from slavery to civil war and reconstruction, jim crow and segregation, to civil rights era and today, race has run through america's story like a complex thread. this week, of course, this great fault line in america's identity opened up again after president trump used twitter to blast several democratic congress well of