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tv   WSJ at Large With Gerry Baker  FOX Business  December 27, 2019 9:30pm-10:00pm EST

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hope you'll do that. and that'll be just friends now have a wonderful new year end think it's much for joining us. from all of us here wishing you the best in 2020. i'll see you again next time. hello and welcome to the wealthy journal large peers well we are in the final few days of 2019, and overall it's been an eventful year in the business and financial worlds. stocks of course has soared by double digit percentages with the dow jones industrial average breaking both of the 27 and 28000 marks during the year. setting where that it doesn't record high closes. companies such as apple and disney led the way as they too made record-setting look easy. businesses hide to the breakneck pace, the labor department says about 2 million jobs are created in
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the first 11 months of the year. that's an average of a hundred and 80000 a month. then employment rate dropped to 50 year lows and your some minority groups felt the lowest it's ever been. workers have seen the average outing wages increase in healthy pace, by about 3% in the cost-of-living remains low. the economy continues to chug along at a solid pace, and fears of a reception that we did have earlier in the year have mostly abated. and all of this positive news, there are consumptive concerns. especially for certain companies. boeing is one of the country's major manufacturers had a 737 max played and grounded in march following two deadly overseas crash sprayed the temporaries temporarily suspending production as they block the aircraft them coming back into service. more brick-and-mortar stores are payless and gymboree, have bankrupt or close locations. as en route let online retailers eat away at their market share. several companies have once seen as the darlings of a new economy, fell flat on their faces as investors realize their actual profits didn't
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come anywhere close to the hype that was surrounding them. and today were to look back at the major business and financial stories of 2019, and see what might be ahead for 2020. and to do that, i'm joined by two of the sharpest minds to my colleagues and sharpest for the wallace street journal charts for all. gerry: let's start with you if there's coverage of all of the coverage, there's one overarching story that really you think kocher attention, really drove, gave us a picture of what's going on a corporate america, what was it? 's speemac will major fall from grace was rework it was a real estate got an evaluation of $47 billion is on track for and i do on the employer on the finish line. and actually looking back, it should not of been such a surprise. the wall street journal reported two years ago that people were overvaluing this company and looking at is a
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tech company when it was really a real estate company with the sort of start up cool vibe around it. the investment community got enthralled with the founder, and it was journalist and investors giving scrutiny at the end that fell the deal. gerry: what is the lesson from that catastrophe more broadly for investors for people. >> groupthink, it was a commons theme are wrong these groups it's one person advocating their judgment to another there very, very smart people all around this typing evaluation, when the facts were there. gerry: charles when the markets were different, when they were continuing to very low interest-rate environment, people are pushing for the envelope and looking for up to
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opportunities. what was it for you for 2019. >> we saw that everywhere we sought across a credit space, and income markets. we work with people who are the a pity me of that. this company was not even close to profitable. and still people were throwing all this money at them. i thought what was fascinated about what happened worth we work. is it the return. if you think about where we were at the end of 2019 and this will be the work for ipos it's a new generations of unicorns were shaken off the dust of crash in every thing was coming back. it really puts and breaks on it. because people to completely reconsider, and that have been starting with uber and others earlier, but we work with certainly the one that made us think the tightest turn. gerry: and excitement about these tech companies in the ipos dried out. >> it endeavor was also polled, and a lot of hi ipos,
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pinterest was the good performing one, and that's pretty much flat at that. a lot of higher profile in one of the best referring ipos was trade wind. it was a market data, bond trading platform business that is sort of is far from pinterest and we work as you can get. and this is a company that had profits, paying dividends, paying cash dividends, and that was the real success we had going. gerry: one of the big stories was boeing company and that kind of saga continues. what his gone wrong what went wrong there? >> just about everything. and the company did not help matters. obviously there was a problem and how it designed this plane. and in our reporting, were the key things was that they assumed pilots could handle -- and they assumed very strong pilots when that is not human behavior and four seconds of panic. gerry: was there regulation
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issued to? people talk about the regulatory catch parade where they able to get away with this, with tragic results partly because regulators were kind of somehow turning a blind iron something? >> regulars trust boeing which had worked for many years. and they not only trusted boeing in the design of the plane, but after the first crash, the reassurances that things to be fine, the october crash, and then there was another crash. and it was china was the first country to ground the plane, not the united states. so there has been a lot of scrutiny not only on boeing but on the faa that will continue in 2020. gerry: boeing was the exception this year many companies saw big increases in their stock prices, the market overall more than 20%. what's driving this, continuing bull market which is been going for very long time? >> it to be totally honest it's a low bit of a mystery.
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one answers the u.s. economy has remained really fundamentally strong and in you.out introduction declining unemployment rate, generally pretty healthy u.s. economy, a lot of stuff happening around the world, and global movements in china, and trade, and this is pretty solid american economy at this. it continues to power a large part of the worlds capitalism. it's very much and america had a good year story. gerry: evaluations looking a little bit pricey right? >> yes but that's always a relative question. it depends of your comparing it to. it depends how you think about these sorts of things. it depends what your other options are compared to this bonds have also gotten quite expensive. so it's hard to say that we are into some sort of big evaluation because it doesn't have the classic signs of irrational exuberance. gerry: jamie what other countries should be looking at this year were there
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companies. >> shows the wildfires in a been so troublesome in california were quite exacerbated by systemic failures at this company. we did a lot of investigations to reveal that for years they did not upgrade their electric lines. that may be made it more vulnerable to fires. and this company has now been blamed for the campfire that led to the death of 85 people last year. and more that investigated that were not forthcoming with the regulars over the years. it's a very sad story because especially, as a ceo, the new ceo said it's going to be at least ten years of blackouts, periodically in california before they can fix the problem. gerry: will come back at a minute work and take a quick break jamie and charles stay with us. coming up to look at some other stories, stay with us. but you don't feel good.
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gerry: i'm back with the wall street journal's charles and jamie. charles mr. with you. in september of this year, we saw a kind of very strange moment kind of sort of a panic, to do with their repo market which caused tremendous dislocation and concern and financial markets are on the world. briefly explain what happened. >> this is something that really came out of the blue parade the repo market is a secured lending market between large institutions. you're getting 70 a treasury bond or something and similar value of the game's impact cash and you swap back and forth. this should be a market that should be common along the circumstances. there is really no reason to suspect something ago i'm missing something did go to mr. their people who were unable to borrow the repo market to the.of the rate spike very high in the industry's clear prayer and part of this is what's lasting thing, that is a topic for 2020 and seven keep an ion is the fed is pumped money into the system to try to alleviate
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the strain, but we are at a.where is not entirely clear and poised postcrisis and post- regulatory framework after the crisis, of how banks should be, how much reserve bank should be holding and what that looks like. it was very clear in 2008 but is not clear now. and that leaves the market vulnerable. because you don't know how much a bank needs. gerry: they draw down a balance sheet there's was to building up. is that going to ease those particular? >> it will ease it somewhat but the fed's had to put it in for this emergency and they haven't been able to pull it back. and so the emergency has extended to a longer time. the long-term question is what should be done to sort of get us out of the permanent emergency? gerry: i want to speak about 2019 was inserted interesting cut by central banks the federal reserve. >> if you turn around a bunch of magistrate hikes in 2018
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and 2019, the cuts particular in the context of the unappointed picture in the economic picture there are very few people that see this. gerry: what is driving this summer he thought maybe jay powys feeling under pressure? >> i think that the tough tough question. i think most of the academic work, and most of the work around looking at that question has settled on not really. but, it's definitely true that the trade conflicts, that the worries outside the united states did because the fed to say okay hang on. we need to worry about what the possible impacts might be on the u.s. economy. we start cutting rates. gerry: it seems to have stopped now. >> they seem to stop now, they said this is what we are. but still, we are to low level. we are to low level, given how far we are into an expansion, and there's not a lot of people with a ten year yields, if you look at the yield curve it looks steeper than it was earlier in the air. it's still relatively flat and we should ask people don't believe the interest rate hikes and normalization is
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coming. gerry: jamie, one of the other biggest business sources 2019 was streaming. everybody has the subscription now the go amazon prime, and the whole way in which we consume content is changing dramatically. tell us a lot about that. >> there's a hole reshuffled this year with the major media companies. at&t which now owns hbo and disney comcast, deciding they had to be in this game and a big way and that's what has overtaken them an apple ii. gerry: disney kinda going on their own? >> absolutely going solo and they launched 699 which netflix popular program of 1299 and then apple plus tv came in at 499 even though they have less to offer. it's basically a case study and how do you price? and all the shows are going to do well of the new original content? and how much will people pay? we did a survey, our media team did a survey with harrison we found that people,
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consumers were willing to pay $44 a month for an average of 3.6 services that's a people are saying now. we will see when it rolls out, what their appetite is, how many services they'll pay for, and will basically turn into another cable subscription? gerry: it's kind of a mushrooming of this. people used to say is paying hundred and 20 but now then i'm almost paying, and now are they gonna pay is the same? >> i think one of the differences it's quite easy to cancel and resubscribe to streaming service much easier than a traditional cable service. so we'll see how much turnover there is. gerry: in one quick thing that whisks passing this year's food delivery. and that has become again part of the sort of service oriented economy the way we become so used to. >> yep we've seen all the dream shows in everybody sitting at home morning food and watching movies. he comes back to we work to
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the because these companies, door -- they've been fueled by venture money on david able to grow without necessarily being profitable. hoover eats as well. there's been a huge grab for market share. but not necessarily profits. and so how those companies shake out in 2020 will be an interesting thing to watch. gerry: thank you both are integral more break, but up next we'll look ahead to see what might be coming up in 2020. don't go away. ♪music (air pump motors) (lamp crashes) ♪music it's the final days of the wish list sales event.
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gerry: welcome back charlton jamie for the wall street journal, we're looking ahead at 2020 but two very quick questions about 2191st pair jay mejia. one of the things we saw this year was back in the late summer, the business
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roundtable, group that represents a lot of corporations in this country, came out with a big statement about what the proper objectives of the company should be. no longer simply receiving shareholder value but i what are their obligations? we've heard a lot about that in recent years. how real, our company is really rethinking their role in the capitalist economy? >> at this idea they should care more about stakeholders, like employees, customers, community, environment, over profits. into some people this is just kind of stating the obvious. it's like if you are not in touch with your employees, their concerns, and doing things that people care about, diversity or climate change, then you're not going to be profitable. so in a way people are advocating themselves they're stating the obvious. but others felt it's going down the ray wong path. and even some the things we just talked about, and we were, adam newman, the head of the company was focused on whether meat was going to be
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served up company parties for environmental sustainability and was not paying attention to parties. so even the advocates of the stakeholder model will tell you that it's in addition to profits, like you can't just skip profits. >> charles o1 quick question the story of the duchess and the baby. >> it's due to our wonderful tax economist pointed out prince harry and meghan markel's child is american and subject to the irs as long rates. and part of the delight in finding this outcome is how much the irs will reach into the lives of overseas citizens, and things like gifts, you have to be careful about gifts. and you can imagine as a royal baby, he might be subject to receiving quite a number of gifts. which just make sure you keep your eye on that with your taxes. gerry: americans and britons have gone to war on tax in the past, just kind of wondering about taxation without representation for americans. jamie quick look at 2020 what is your perspective what you
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think you're going to be the big themes in business in 2020? it's continuation of 2019 r1 new focus on something else cream? >> well for boeing, now that they've halted production, that's going to be a huge economic story. there are 600 stories in this the clyde shane there's really no visibility on when it's gonna come back. so that's a huge economic story. the election, you know assessing president trump's record on business and of course his rivals and what they mean will be to big things. gerry: charles, financial markets? >> it's going be a fascinating years can be volatility, we see a couple big episodes of volatility in the markets and part of this is a big shift towards sort of a factor investor in other ways that people think about the markets is not just i what do i want to buy microsoft or apple? but i want to have exposure to these technical factors inside the market. a lot of the step is driven,
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the behaviors driven at the end of last year end that something to keep an eye on for the coming year. trade obviously a big concern, the economy broadly speaking is globally speaking a big concern. there's a lot of things to keep an ion in the financial markets i think payments is something were going to see a thing in 2020 facebook had its attempt with the leverage to try to rethink the payment system. and i think that is something to keep an eye on and think there's a bunch of banks who wants it closer to customers and being away from being just pipes. this is can be an area this can be pretty interesting. gerry: thank you very much indeed have a happy new year both of you thank you much for joining me. i want to thank my colleagues at the wall street journal. coming up next lessons learned over the not just the last year but the last decade, and what they might mean for the decade ahead. stay with us. imagine traveling hassle-free with your golf clubs.
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verizon keeps business ready. gerry: this week we've been looking back at the year, but is of course the end of a decade. the big trends of the last ten years i would argue have been probably twofold. one economic and one political. the 20 tens have been the first decade since records began when there hasn't been a recession and the united states. now growth has been somewhat slower and previous expansions, but that tenure long expansion is still a remarkable record. and there is no immediate sign of a coming to an end. now course the new political trend of the decade's fashion
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is populism. most radically in their election of donald trump and in the british peoples move to leave the union. economic factors have played their part in this with the effect of globalization and fear of the displacement of traditional jobs by technology for example. but i think these were amplified by a sense of alienation from many people in western democracies. in alienation from their business, political media, and economic elites, who over a long period of time have been denouncing traditional cultural norms on issues such as social issues that we see. they denounce those views is bigoted and the people that hold those views as deplorable. while looking back, it's clear now that this was the decade when those derided people found her voice. at any of decade begins and there's no sign that they are losing it. will that this process week for the latest updates please sure to follow me on twitter, facebook, and signum paired i will back next week when ellie back with hedge fund manager
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mark lazarus, that's right here on the wall street journal at large. thank you for joining us and have a very happy new year.


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