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BlackRock senior managing director Peter Fisher weighs in on the election and the future of the economy.
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Oh and more on the fiscal -- of the tax cuts expiring.
Spending getting cut defense spending you name it and next guest says forget November the sixth.
The days immediately following the election are much more important to the future of this country and this economy.
Peter Fisher is senior managing director of black -- had the fixed income portfolio management group there.
How much danger we -- right now Peter and are we already in a situation where we could be in a recession will likely be in a recession in the first half next year.
Well I think we've seen that over the course of the summer a lot of business confidence and household confidence getting -- out of the economy because of the worries about the fiscal cliff.
Even the Fed said as much in September.
They don't know which way the economy's going so they don't really know what to do here.
So I think we can see that already weighing on the economy.
So a lot of them mathematical estimates of what the entire fiscal cliff would -- is sort of negative 4% on growth that would be a very bad outcome.
But it's not gonna happen mathematically automatically on January 1 of sort of gets average -- unfortunately some of it's already happening.
With the downtrend we can see in business fixed investment are you hopeful.
These lawmakers act -- and a responsible.
Well yes I sure would love to see that men and I mean obviously re election matters but the day after the election whichever candidate wins.
Is going to be sending a message about is of their way or the highway they got the votes so they're in charge now.
Are they -- -- be saying now's the time to come together let's avoid this bad outcome for the country let's address some of the reform issues that Steve was just talking about.
Do that over the coming year but that mood is going to be vital -- both the economy and the markets could really.
Being a win to their back or could be a problem -- depending on the attitude they take.
Do you think it will ultimately take big picture with the debt -- national debt north of sixteen trillion dollars.
It will take something going horribly wrong in this country to force them to really address that situation not talking about.
-- security and Medicare.
And may be it's significantly higher interest rates all of a sudden it do you believe that it will take baton and do you think that could happen.
Well I wish members of congress would recognize that -- really weaker economy growing below 2% is the bad thing they should be worried about.
You know that's what happened with the with the debt ceiling pat and passing -- year ago and August.
You know we had a really bad outcome we had we got downgraded by one of the rating agencies.
And that -- interest rates went lower because our future was bleaker.
So the politicians have got to get over this idea that low interest rates -- the best interest rates.
Low interest rates mean we don't have very rapid growth people are gloomy about our future that's something they gotta get over that's the bad outcome mission -- you.
They get there again there are -- -- one another worrying about the debt and it dealing with the slow economic growth but he can if you addressed both of them at the same time.
Do you get a positive -- come on both yes.
I think -- well I think as long as we see some leadership after the election that looks forward and tries to bring everyone together and isn't isn't uncompromising.
That's what we all recognize and Bowles Simpson even if we don't like all the details we recognize that fixing our nation's fiscal future is going to be a messy compromise.
What speaking of lower interest rates because we always look at treasuries but even if you look at say the riskiest fixing common asset say.
High yield how high yield has -- been performing well how much -- Reward is left in those forms of fixing -- in terms of the -- risk that you're taking at this point.
Well it depends and if we end up like Japan and a long slog like this for another decade in which case you're gonna be really happy you bought some of those high yield bonds now.
Or are we gonna recover.
And then they'll be a broader set of assets to invest and make some -- on -- behave well let me let me say a different way which is I think you -- -- you go back eighteen months the ten year treasury was yielding 3% right so -- we -- all the way down here.
We got all the way down here because the Fed was nervous -- that Operation Twist.
Because -- -- -- and 'cause we have the fiscal cliff who knows we might even have a recession next year -- that took us from 3% down to one and a half.
We've backed up to one point 71 point eight in that range mostly just -- Europe's not as much of a mess anymore.
That's the only thing that's changed from from twelve months ago we still have to worry about a fiscal cliff than -- -- risk of recession next year.
We still have to see -- we still see the Fed buying a lot of treasuries and agency securities.
There really forcing investors to look at those high yield bonds are talking about as the only way to clip some coupons.
-- -- -- -- -- Thanks back I would -- -- gets he often enough but it's always a pleasure and I told you in the Paul -- -- -- -- -- -- -- -- -- -- we have weather to talk about to India Peter thank you so much feet of.
