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You with us think we're back to -- the old world order -- complexion that.
Data sources show this needs fifteen seconds and we're back in the old world order of higher stocks and weak dollar higher commodities.
Little bit of a break get -- right predict almost predictable in some ways.
Force everyone keeps on saying 1010101000.
Is what we need to get to the next level going to be watching.
Special -- little bit aways in the market not really am very -- Taxes several fashion.
Worst thing you can be is noncommittal they say so yeah we'll talk about that we'll talk about the marketing and in depth and and gets into some of the big.
Issues that are out there including regulation and health care and everything else Jeff fox had a great story and Illinois a little bit later on in the hour but we begin -- Ben Halliburton about.
Tradition capital management chief investment officer here with this is studio in New -- is conceive -- thank you Gergen who.
Parts what do you make of it because it is kind of this rally that has come off the lows by 50% and here we are and everybody is -- says.
Is making a deal whether it's warranted or not about the round number of Dow 101000.
Is that kind of where we stopped.
We're room where we start something new what's your view on the markets about 101000 definitely number psychologically.
We've had a massive move off the ball.
And basically own the premise that the economy was at -- no -- getting worse.
And then -- about to have a sharp recovery so now in a situation we've got to start having proof that a sharp recovery is underway.
If we don't have a sharp recovery I think stocks could weaken considerably.
Yeah that is here and make money when you know the market's going down -- going up rather than this period where we have been really flat and -- to -- probably two weeks have.
Not really moving.
Much at all book she ever knew the market is going up for Dallas certainly you could definitely make money -- what we -- -- is -- that and what direction you can even handed down market where people can strategize and make money -- -- so.
When we're kind of in this period well we're not -- the next move is -- Lot of uncertainty right now so give this is very difficult time there the capsule bulls that are certain -- we're gonna have a typical V shape recovery.
And then there's the more pessimistic among us that think that -- sharp recovery given the consumer balance sheets and employment issue is unlikely.
When you're in that campus -- -- -- among us that you did you think that the economy is gonna recover.
Slowly or is -- or are the fears of a double dip recession next year really warrant to -- -- how you see it playing out.
I think currently we're seeing a -- Recovery at least in the third quarter GDP number primarily because of monetary stimulus and economic stimulus.
That is basically calls that one quarter pop.
We would not be surprised to see continued economic contraction in the first half of next year.
I wonder about the stimulus timing I have just people have different views about somebody came up last -- -- that -- topping out right now this is that.
The heaviest -- -- -- to get from the government and other people point out some of the stats that say.
Well we haven't ruled out a lot of it yet and it'll still keep going into next year which shall keep the economy propped up -- the question mark.
Economically is -- 2011 not a 2010 question.
I think they're saying the same thing the biggest del -- or quarter over quarter.
Impact from the stimulus program was in the second quarter and third quarter and then you get to about a 77 billion dollar impact.
For each quarter there after -- see incremental improvement.
From the stimulus program.
But he continues she continued support the problem is with the consumer economy being -- -- 1% of the economy.
And heavily saturated still way too many empty houses for sale still too many corridor together grass and cash for clunkers the typical signs of recovery.
Are not there you don't have pent up demand from big consumer items.
-- you having some in the -- and your investors your your client say -- women felt that excuse me you know where work.
Eighteen we have to be in some what we have to be in play here because -- -- have gone that's you so much really from their lows so.
How do you handle that have a pressure reach out and that you're doing instead with the money then let's say getting fully involved in the market.
What were partially participating but we've from remain pretty cautious and our equity stance and -- -- selection.
So we continue to emphasize.
New companies that don't need a strong recovery in the economy.
The health care response to consumer staples we found those to be very attractively valued and within the health care sector given all the rhetoric coming out of Health Care Reform.
The valuations are extremely depressed what do you consider consumer staples these days.
Well when we like Procter & Gamble we think that's got a very good long term story and they're gonna come a little more value approach start -- -- we'll share back.
We think that's a good international position we like PepsiCo.
You know great brands as far as an international basis for -- Frito-Lay PepsiCo.
It's so we think those -- There's very trend that we know I mean that we would that this you're familiar -- that we know him.
You know the health care conversations -- in -- and in a lot of ways obviously that the politics of -- we talk about ad nauseam and there's even more today that the market for this -- wondering how it's gonna all play out but you've got appointed a low valuations of the health care.
Stocks so you like these names and we had a conversation our morning show earlier today where you don't.
Regardless what happens the outcomes that are being talked about now are a little bit better than expected for some of these health care stocks in other words they were expecting -- keep.
Have their business models challenged -- now at worst they'll have some competition.
But or maybe nothing will get done at all which would probably be the best case just profit wise for those companies -- -- -- all calling on Washington.
Yeah I think the draconian outcomes are.
Pretty much gonna come off the table and I still think there are some risks to the health insurers and HMO's depending on how exactly it plays out over time.
So I think those have a little more risk but the product company and device companies those still have very attractive.
On a global basis to elect big pharma for example well we prefer by observers are tied with Abbott is one of our favorite thing avalanche -- a -- former presidents but also.
-- some consumer and some Verizon activity -- -- is one of our favorite names there's generic pharmaceuticals.
Unit continued unit demand huge pipeline.
Branded drugs coming off patents so they're gonna have a huge opportunity to introduce new generics so that's a great story.
On a longer term basis do you have demographic trends still driving units in the US.
In the developed world the developing world has people who -- wealthy -- better health care through spending more money on health -- you've got a global story here.
Look than it was she shift -- and -- some global plays as well because one of the things that noticing and your notes is that they keep hearing the word fundamentals which is something that we haven't talked about a lot recently because there's talk this -- about.
The actions in the stock market but when he actually think the economic fundamentals are gonna catch up.
With the stock market here in the US -- in how -- -- positioning yourself with emerging markets.
Since defending -- outlook is not necessarily.
Optimistic how do you position yourself on -- -- -- -- mark.
At -- through the global markets outside the US very much better shape than the US markets as far as the economy.
So you -- to have companies that have exposure to -- multinationals and big international exposures.
The fundamentals as far as the economy catching up to the stock market.
Yes some of the analysis indicates that we would actually be in the second or third year of recovery given the move that we had from the bottom.
So we've got a long way to go so if you don't have a sharp recovery.
You talk about multiple years before you catch up the economy catches up with -- talk.
Perhaps one of the viewers has allocation question terms of stocks and bonds and percentages right now I -- said that always depends.
Seems to -- on you know how much risk an individual to take on also -- they are in touch -- enough taxes for that type of thing but what.
Type of advice are you giving people terms of changes to allocation.
In -- the other important and -- better within.
So if you're.
You're basically looking for safety and income I would be -- 60% or so into the fixed income market.
First of -- that international basis as well don't strictly be in US fixed income to 60% bonds -- -- -- -- -- some more interested in safety and no good reason right -- that mindset a more aggressive investor.
Right now I actually think the more aggressive investors should be moving more toward cash.
Mean there's not a lot of upside in stocks take it off the table and take off the table -- and more aggressive investor retreat back in the lower prices.
We look at the dollar bill that we saw diet and twelve month low vs the Euro today it's affected -- commodity markets have those -- -- -- -- cash do what about the dollar.
The the dollars and the situation on a longer term bases where looks like there's going to be continued pressure on the downside.
Not only do we have a massive expect expansion of the Federal Reserve basically moving the high -- money up but to an apple.
You've also got these massive fiscal deficits.
Unfunded Social Security unfunded Medicare fifty trillion dollars in government.
You know federal government that.
It's a big number the dollar weakens over time.
The issue -- the dollar has been -- everybody's bearish on the dollar most of the near term downside is probably already occurred given how bearish everybody -- Suing you say cash says he does that mean you.
And then just be clear for our viewers as far as you know I think he's putting in -- savings account and -- me is that what you mean by cash -- guaranteed money market short term instruments.
Stuff like that.
And good to see you thanks -- -- thank you -- good conversation that Halliburton net tradition capital management starts us off here.
Today we'll tell what's coming up -- some ideas about.
Regulation or lack thereof and too big picture thoughts about what we've been.
Talking about for a while here we have what administration got covered today as well ten minutes in and -- minutes ago my -- But this is not come -- there was.
We're joined now by -- Tillman he's the president of -- and Tillman and company appropriately so yeah.
Am happily and exactly.
Before we realize who will -- -- rent regulation but for our viewers that may not.
I know you would tell us a little bit about.
Where you come from and why maybe have a -- Think perspective on this this regulation competition.
Well my my career stand in number Wall Street institutions I've worked at -- crock.
One of the largest pest management firms and -- that was achieved institutional strategist for Bear Stearns.
Which is -- chick advisor to the firm's clients.
My firm is a strategic advisory firm that advises some of the largest.
Financial institutions and governments on the planet.
And we -- essentially bridge to gap between risk management corporate finance investments and tried to offer the most holistic big picture perspective to -- Right and now injury position we were the reason revenue ought to talk about this regulatory environment -- peace there was an.
The Harvard Business Review lately recently were you rode up your thoughts on.
Hey listen we don't necessarily need more regulation but we need -- better as the title of the -- said strategic vision.
Com try to explain to people what you mean by that because were right in the middle all the talks is are we -- regulate these financial institutions more -- -- learn our lesson make sure this never happens again.
And now we're talking about how to do that what are the -- -- the main points we should take away.
-- think about the evolution over the past year.
The world who would never be this same conversation post Lehman to the world is coming to an end.
In March and now it seems that the word that will this pretty much what it used to be.
And the biggest concern that we have is that while somebody leading financial institutions embracing change.
We think convinced that way they do business in general thinks -- -- -- much back to normal.
-- that means that very few lessons will truly be learned.
In the greatest concern is that we setting up the nets couldn't do this crisis as we speak because some kind of a -- stemming from.
Could be could be triggered by the dollar unwinding could be Bretton Woods two out of China could be variety of circumstances.
Where the huge amount of leverage and liquidity that is coming back and is going to wind things up.
He's going to on line pretty much along the lines that we have seen in the problem is that.
The regulatory changes are not going to address these kinds of systemic issues that we're talking about.
Clearing derivatives on exchanges is not going to provide the kind of transparency.
That we need but most importantly this vicious circle.
Where financial executives need to deliver earnings quarter in quarter -- you respectively of the environment.
While everybody's watching it come to earnings in things that it -- -- was contamination.
This is a recipe for the next disaster -- to change anytime you need to -- financial markets with the right kind of information.
They need to understand exactly with the revenues of these financial institutions are coming from.
They need to understand what kind of risks they these financial institutions -- because you you look at these mountains of papers.
That financial institutions filed today and you still don't know.
How brief Q did balance -- as -- the entire saga about stress tests that we went through a few months ago.
Was an indication that based on public information you have no idea.
-- about the kinds of risks that they take and you need some kind of new information so but unfortunately that's not the direction we are we moving.
-- the need for strategic vision on both.
Parts of CEOs and boards of directors is a reflection that the help is not going to come from elsewhere needs to come from inside of.
-- -- -- let's let's talk a little bit about this event tied to some of the news of the day -- Federal Open Market Committee right now -- and a Federal Open Market Committee meeting right now.
You want to have the conversation down in congress that.
-- -- The desire is that that fed the Fed does not have the power necessarily to be the systemic regulator yet the president saying wait I want the -- to be a systemic regulator.
Who you see the financial institutions sauce of these self regulating.
Seems like a combination of both would be appropriate that in the in the way that you look at it what do you think your role of the Federal Reserve should be.
You you know that they're pros and cons of making the Fed the systemic regulator.
On the one hand there.
In charge of monetary policy in it's just unclear at this point two -- extend its contradictory.
Do you have monetary policy.
And systemic regulator be the same.
Entity what I understand the argument the Fed in terms of its outreach in and qualifications it's probably best equipped to monitor these things and understand what's going on.
In the system as a whole whether this bad was it some other entity you do need a body -- an entity.
That is capable of developing very broad perspective of the entire industry that was missing.
And so far is it still missing.
Hey when we start this conversation I again and it Molson originate out of Washington and that.
I just wonder whether or not we're talking way too much about who's going to be.
Regulating as opposed to the rules that are going to be in place and you know people don't really care -- the Fed or anybody else the White House wants the Fed Chris Dodd wants somebody else.
But one or that what's.
Whoever's doing it what did they need to put in place just the rules of the road all right and we know they are all played by and figure -- out.
Prevent this from happening again maybe something else to come up whatever the case may be -- one of the first steps that regulator whoever it is should take.
Well first of all I agree with you completely dead.
We don't particularly care who that is as much as what is being done -- an effect on the eve of the announcement of the regulatory reform I was.
I was -- media parents and someone asked me who won.
And it didn't even understand the question and they were asking which one of these agencies is to get more power -- just doesn't matter.
What matters is I think two components from one is.
You need someone who who's capable understand the complexity.
In the pool -- in the entire breadth of what's going on across the world.
In the financial industry.
Fed is probably qualified to do that put -- the same time you need to develop.
Through regulation different kind of transparency when it comes -- -- usually steps this book whether this would person nor.
And he would be would take what -- you know would be something -- -- capital for banks or would it would be something I don't believe disclosure.
Understands economic capital a financial institutions what does that mean.
Go beyond regulatory capital and things that we currently watch -- truly.
Quantify how much risk in institutions taking is the capital adequate given that amount of respect that connection -- to completely missing what's.
To understand how none non regulated financial institutions hedge funds.
Private equity -- since that trip could exacerbate the crisis that connection is currently missing.
In three feet in determine bubbles in the making around the world could be fixed income could be gold.
Could be other things so you need these three levels at weeks to monitor the system and understand what's going.
But what's the incentive that anyone and we talked about and sent them like the bonus and as far as a way to.
Attract investors that this is now Wall Street and take -- that are unnecessary.
First of knowledge you really think that anyone understands -- the whole system actually works because there seems to be holes everywhere and to.
What's the incentive we -- like Goldman Sachs for example having a tremendous sporting -- mortgage backed securities.
1015 times that they were worth a year ago gaining value in the market becoming -- once again.
Regardless of repair in in real time in the real -- on on the streets and homes and of America so.
-- -- two part question if there really anyone and gets it really gets it into what's the incentive really for anyone to tend to do that.
Well when things are improving this -- in a technical way for these financial firm.
Well I think the expertise the collective expertise is there.
It's a matter of how you put this together and what body would regulatory red -- that the people apparently -- feel like they get well.
Not necessarily people in power of five people in general you can comprise very skillful teens.
Regulators petitioners and others who get it.
But -- -- so what's the incentive for them to come forward and actually do something well.
That's -- that's a separate issue and it's unclear how you create incentives on that level how you attract professionals of that caliber right capable of doing that.
That's that that's a big question mark.
But in terms of companies.
We need to be -- with the objective of these companies is and what their role is in the system and that that's this of the term strategic vision I wouldn't have meant to -- -- -- -- -- Yeah it's -- -- point -- because the financial firms have posed a risk to the system.
It seems like inherently they've shifted from being money making.
To having a political implication that they never wanted to begin with it is made a whole lot of money nationally because of finance arena at -- risk to all of us.
Politically and otherwise -- I mean that wasn't.
There intention but now they've moved from just being a business to now had an -- responsibility that they didn't want the -- were successful.
It's part of.
Change that -- that has taken place over the past twenty years or so in finance where all of these businesses became -- monetize their margins compress.
So that's the role of financial institutions shift it.
Big business models being dominated by these come monetize services like brokerage shall commercial banking into risk taking.
In the moment you -- that transformation.
In you and now in macro hedge fund started as an insurance company or broker dealer.
All of a sudden you so much more susceptible.
Do these -- systemic effects so that's what's happened what would happen across the board and that's why financial institutions now occupy very different place.
In the economy in the system -- -- The which means again.
This strategic vision of their executives of which business and what -- BM.
Strategic vision of the boards of how they go into peak incentives that properly.
About taking risks can play in certain roles that's to me is the biggest question that needs to be answered.
But we -- back in the short term money making kind of frame of mind and therefore when everybody is loading up on and carry trades because of the way that the -- -- is looking.
The way that everybody's -- into this long term government provided funding.
The moment -- have inflationary pressures -- China unwinds its currency.
You can have dramatic systemic shocks and nobody is preparing for it and some of the biggest lessons learned.
-- -- don't seem to be resonating with people that.
Let's just think that we're gonna run.
Unfortunately but the it.
Just to be clear when you you're -- strategic vision and not not not a focus on the quarter to quarter -- the beat by a penny stuff and all this kind of thing.
Are you suggesting that.
Did that system should be scrapped altogether -- your earnings reports in the -- how you get rid of that without.
We can't just single company.
All right don't worry about this anymore because it mean everybody else is doing it -- that goes back to -- what about what the incentive this same thing here what he's saying just get rid of quarterly reports for earnings of known and.
You you continue these practices that you recognize that these practices are not reflective of long term value -- you how do you.
Who recognizes that I guess that's my question well I think -- -- -- someone.
You know but but think of every company that's failed over the past hear from you all had record accounting earnings right before they failed yes -- also -- Great credit ratings right before they felt so I think people should keep this in mind exactly these are absolutely.
I'm not only -- work but we recognize that the information to -- his decisions is just not available to them.
So you have to be extra cautious but the information inside of these companies he's available.
So companies must decide what's more important for them to deliver these earnings -- -- of long term values and it.
I am investing in the market to it's getting progressively -- And talk to him.
And teaching and club around his -- on.
They're treating me well and we've had been meeting key studies as you may imagine so yeah.
Love you don't have to Trent tags Juliette classic -- absolutely right absolutely love about their films like the that I think -- so much thanks -- profession Helmand.
Thank you apparently don't tell them there LM Tillman accompany him coming up next in.
-- get a cellphone we assume everybody's watching your show on the Internet as a cell phone because if you don't this is really your prepared very strange.
So with that said the next story might affect how you yourself on that's -- you need to know -- -- next foxbusiness.com live don't go.
You -- -- and that they did that question about -- right if there's any actual frontier left.
-- -- got a do you think about all the ones it's come down less than ten years has got to be something we never thought of the wild west.
No longer in space I don't know the -- could be actually that frontier was a lawless area right now.
If you think the only other time look at what's going on right now on the net Brian Patricia had -- here in the moment anyway.
That that outlook talk about net net neutrality yeah kind of need -- definition I needed it gets thrown around a lot.
That -- for having Amy Schatz says -- is that Wall Street Journal reporter she's joining us are from heat heat explain this to ask Amy what is that what is net neutrality.
-- net neutrality the idea -- a child is nothing more than as a consumer you should be allowed to do anything you want on the -- as long as it's legal.
And that the companies -- provide Internet service to you whether that's your cable company -- your phone company or your wireless phone company.
Can't do anything -- can't mess with the traffic to keep you from using their services and then not using somebody -- service just.
So that is true right up the actual Internet while we're using their computers but it's not a problem we're using our phones to get on line is that the basic bottom line that might change.
Yeah basically I mean there at least a few guidelines right now to sort of keep.
Came -- some companies from sort of mucking around with stuff too much but those -- have never really applied the wireless and one of the things that the new FCC wants to do is to say look doesn't matter where you get your Internet.
The same rules apply and that means that would apply to wireless so your iPhone and things like that -- -- -- -- an example practical example let's say -- back.
Ever and maybe shopping how I'll tonight on right here I mean did he -- if maybe you.
-- give us an example of how maybe he's limited or or not limited based on the fact that he has an iPhone he has eighteen -- -- and that's pretty sure.
And I know what -- what do you do you hear that more -- -- not get away with here that you cannot -- on your home computer for example.
So there actually a couple things are now so let's say that you have -- by the Skype application and find out iPhone right now but do you can't use you can use guys if you're on a Wi-Fi network but you can't use Skype on your on AT&T'S three right where.
As AT&T doesn't want -- making the calls because they want you to pay them to make the calls right that's the whole point.
Exactly okay and that's another that's another application to counseling box which allows you watch your home TV.
On and a peace deal -- that's you can again you can reason on Wi-Fi network you can't -- -- -- three G network under the chairman's new rules.
That wouldn't be allowed.
-- but sounds practical and it -- that consumer who -- in this era of consumer protection -- consumer right.
-- where do you actually see this going at it seems to make sense but I should the companies would not be too happy about that.
That's the thing that it child is when he's really touchy issues because it is how you feel about it because villain Maurice -- if -- on the consumer side and you just wanna be able to use your iPhone.
The same way that -- use your laptop -- whatever.
This is great -- I mean it's sort of prevents companies from locking you into some kind of business model and -- it could help these are save money on line it seems that.
Company perspective this is terrible they write the idea that.
It's funny because it seems to me -- they hate the idea but it's almost like.
You -- one of these issues where you know where it's going longer term because we're -- -- use the Internet more more on our phones than we do now mean we're already starting to.
I shot I you separately is it more.
Now maybe not yet -- almost on my phone Sunday especially if -- a -- lot of work as much that I do on a computer access at home I use my iPhone -- the Internet more than my actual computer.
So this is going in the direction of all being equal right at some point so in other words what these companies fighting to hang on to they've they have got some sort of negotiating ploy knowing that they're not gonna get everything they want.
-- it -- here is if -- Comcast you don't want people to cancel their cable subscription because they can watch TV on the Internet.
Because that's -- a revenue stream that they're not gonna get in the future and it's your eighteen -- you don't want people.
Climbing all over your network and watching all this video when you only have a limited amount of spectrum and it costs a lot Prius or run that stuff.
-- so a lot of the idea here is people are trying to preserve their business models as everything migrate onto the Internet.
And the FCC sort of wants to see a lot of that a lot of those -- kind of go away.
But that's a question right because it big time downfield and a lot of great responsibility is it it it is the responsibility of the businesses and change with the times.
Or is it more responsibility for all of us to understand that based on.
What options we -- as a consumer price she's eighteen.
And where could this -- -- resurgent where where do you think the cookie crumbles there.
Well it's pitched in to watch because.
You know these -- -- not set yet the SEC chairman who has had the backing of President Obama has also in favor of net neutrality.
Have they -- some things but obviously will not set yet we've got a couple months where they're going to be looking at how to actually write the rules and a lot of the details on the stuff.
It's really going to be in there and -- we're really gonna have to wait she.
As the company's start trying to figure out how they can get these rules change a little bit to help them.
What really happens and so it's probably going to be immediately in the spring when we get a much better sense of how this is gonna play out there -- quick before you rent I got that -- could force that.
What will actually enforce benefit if that those -- the role.
Well theoretically be the FCC there's still some question about whether they have authority to do that but they would try to enforce that.
The FCC would be with a whispers of the larger question.
Which I think it's interesting from the point you Vargas is just it just because you're getting a show here we're doing -- show literally live on the Internet.
That is streamed on an iPhone -- types of things.
But it's a TV show like any other TV show and think you know.
Did this business eventually -- cable companies are not -- are gonna have an issue with whether or not the the the business moves on line over time over the next few years and then you have the Internet service providers on one hand and the cable companies on the other sometimes it's the same company so that's all got to get worked out to right.
Who has rights to -- who can who could stream -- all those types of vicious.
Whether all kinds of this is exactly like that and also there's an issue about regulations are no regulations and what you can say right now on your web cast your -- -- the FCC considerate thing about it.
I'm not know you want to -- that they couldn't do anything to.
Hey did go for a letter rev -- I'm not -- Amy hey he's right radar.
Oh really -- -- staying and and we look forward you have more articles on and on that issue coming from -- -- back on talk more about it and and talk as freely as you want with as many as bad words and so -- money is there whatever value and Jamie you're gonna do.
You and I did talk to you pay.
Hey hey there the street yeah you.
Amy give me the green light this -- it's -- it's a new freedom that I try to throw an informant real.
Actually that's an hour I have -- viewers because they're keeping it interesting with our content -- yes we do do some policing number comment board as well.
But hinted general -- -- hit that takes place on the show despite the fact that there's really no boundaries now you've opened it up.
Well I I you didn't know my mind -- you is please see each other.
And wherever we go off and I'm swearing tangent now we don't but I don't practice -- have -- me want to but now we're.
Right after the show at our meeting that now the viewers are going to do you -- -- anti from the neck down and -- trust them I think of -- vessels are -- producer who loved.
Who updates the -- includes comments I.
See that comment that -- get posted and I know that you guys actually okay right.
Assumes an appropriate ones about me that the we are right he wished.
Hub from what's next -- great question you know we are talking to Robert -- out IPOs.
I guess Friday and what did he say anything got a musical reference to the summer heat heat heat -- breaking in with -- -- usual style about them IPOs and and kind of -- You know.
What value -- reach the market if they're actually going to present themselves and that what we should be watching for its -- -- that conversation.
At coming up from Vegas.
Actually take all appropriate -- -- to take a break.
Bring down as a very different than -- -- I had and we'll be right back.
Here Smith I'm towns they'll herald where is that where it counts though.
He -- to -- good children I think that's a strong message three words.
-- vacant warehouse and I'm watching all the comments that are coming in on the side that may or may not I -- -- -- -- when he gets -- our regular -- -- Edward Kim is joining -- he's a senior advisory Grant Thornton again coming to us now live from Las Vegas.
And -- that reread your clear that currently stationed is that your home base there in Vegas.
It is I lived here many years ago and I just moved back here in April how to go out there.
Going great it's it's relatively cool day it's only about ninety to protect my -- in the -- Pretty nice in Huntington sure is this Canada it's interesting you talk a little bit about right in Vegas gambling -- -- -- -- IPOs in new guys in the market head of the new game in town.
What do you makes it hard to IPOs -- we we start to see more IPOs introduced in the market this immediately after expectation what do you make of it.
We are -- to see some more there were thirteen and transactions filed in July and August I believe nine so far in September.
So what's interesting I think of the people are getting very excited about this number.
Going back to the peak.
This market of the IPO market when -- -- 500 deals a year.
While we are we -- That many thirteen and fourteen filed every week.
So it's it's great to see the market coming back but we're working from a -- zero.
In the wake of the credit crisis I don't know -- you're not talking -- -- their high point that was ridiculous right in other words you ever expected to get back to that those crazy days and attack the night by actually I actually don't expect it to get to get back but the numbers I'm talking now we're actually before the bubble.
In the late nineties when we stand an average of 500 going -- he has a year in this country I was all the Bubba being blown up right -- -- ways.
Well they'll then at the bet he even during the peak of the bubble the actual number of -- didn't increase what was what was significant was the size the transactions during that period.
Very very large transactions during that period.
What is happening now mean what is it about what -- -- -- third week of September.
-- I think I think I'm sorry I think part of it is just that the broad market.
From the lows in March doesn't -- is up 57%.
NASDAQ is up 69%.
So you know tremendous -- on the broad market.
You -- see a lot of private equity portfolios.
To letting there -- you know the recaps back into the market you know dollar -- -- -- like.
Some very large transactions I think that's what's particularly notable.
I think even this week you're talking about.
And edition of -- transactions expected in the markets.
What we're not seeing and what I don't think what I'm afraid we'll never see again on them I I don't think we're gonna see the small transactions.
-- ever again we talked about this last time with you.
Right -- so you don't think the smaller transactions will ever come back but tell people what the reason for that is because that.
Lends itself overall volume not coming back to those levels already talked about -- life.
I do I do think it's a it's a structural issue of the market I don't think it's a cyclical downturn of any kind.
The market now with its it's a hyper trading market with with penny spreads.
And the economics in the system have really been sucked out.
Where we're small caps really don't have the support in the market that they used to have.
And if you were.
A trading firm an investment bank.
You're not gonna make any money by a it's trading at supporting small cap stocks in the market -- just -- trade.
Accidentally this said that -- -- that and Wiki IPOs he's actually making money off them.
That's a good question and I think you know that.
The -- -- model's success -- I'd give it depends on on two things it depends on.
The stocking priced correctly and the stock being placed in the right hands.
And this market today encourages hyper treating at the expense a long term investment.
So I'm not convinced that.
Stocks long term get in the right hands now that's not to say that these -- aren't going to be successful there's obviously been tremendous demand.
Pent up demand.
Freebies -- transaction so I expect the first few out of the box.
To be quite successful.
And just you know the market being healthy.
And they're having been -- transactions for for months that we went through two consecutive quarters.
Fourth quarter last year first quarter this year where they were zero and venture capital backed IPOs that's never happened certainly in my in my lifetime.
No one of the larger questions as and as -- -- our reporter Robert -- was here yesterday talking about this week's increase in.
Any amount of of offerings and you know one of things I think you asked him was about individual investors and their access to the IPO market.
-- he was saying how it's still tough for you know our retail our individual investor to have access to an IPO obviously so.
What why should people care if there's a pick up or not and I guess what's that what's the real world application enough for them.
That's that's a good question I think I think IPO -- are more about it it's more than just.
What's happening with new issues in their ramifications in the broad economy.
Companies to be able to get funded so it help the IPO market I think is is a prerequisite.
For help the economy.
But but the access to IPOs is will always -- an issue.
Funds in the country are the best customers of the investment banks so they're the ones we're going to get the -- allocations.
And it's it's it's economics there's it's not -- it's not a -- thing it's not evil thing it's it's a simple matter of economics investment banks are gonna treat their clients the best.
And their clients.
Are to be the largest most actively traded.
Must -- -- -- funds the corporate clients who were issuing ideas aren't the client they're they're.
Really and -- better -- product for their true -- for the institutional clients.
Larry -- can't right here in just a second the white -- quickly we've -- topping your we were last here about and the second market -- secondary market right PO it.
He gets a progress report this to find out once again present give -- -- privacy planned and how likely think that could be.
Well it's it's gonna take some time but we've seen a lot of activity from firms like second market which is based in New York.
They've been very active in the trading.
Illiquid assets in general.
But they're becoming more active specifically in the private company.
The stock market.
You're seeing quite a few entrants into that marketplace.
Ultimately there's there's room for probably several.
That we've seen a lot of good -- -- activity for second market very -- Who's the CEO there.
Is very bright.
And we know him very well and we're gonna following very closely -- best place to stay in Vegas for going.
We think yeah well today it depends depends where.
Depends I don't depends on the budget I will I will tell you that everything's for sale how fans you'll get you'll get some values -- on the weekends that.
That you haven't seen before so.
You know that the high end properties are always are always very very good bit.
You're gonna get tremendous prices on the weekends that you know rooms that in normal times ago for 600 dollars -- night.
You can -- get for under a hundred bucks right now.
-- -- -- skills to be had.
They appreciate that consumers and live thank you very much for being our reporter on the grass -- -- -- that again that in them.
Appreciate talking again -- June.
Yeah he's talking about -- while before we start -- about the biggest hot -- he signed up to enact IPO markets improvements that in general markets improvements and one of the things we hear while what's happening is that there's still.
A lot of cash in -- in in the market and people looking for places to put it to work.
Maybe some byes to be had -- silver black joins a senior index analyst at S&P -- standard course Howard good to see you.
You know it is that this idea of putting.
The cash into the market whether it's you know would.
Mergers and acquisitions -- just putting cash into the market for investment purposes.
Is felt a lot of that in a start -- already has started happening what do you guys numbers show on it.
Well we've shown vessel that the companies have a lot of accidents we can't just hit the wreckage Hawaii and now -- -- also that shares from all those will buy that that the companies did -- my drive prices of course.
Also sitting here so they've got about triple the 22 point 3% of the market value fitting the -- You know ready to use -- that that they can do -- and the name what does that.
Right -- -- ventures and I think there's going to be a big boom here.
In the type of merger like -- did earlier this week in these all cash deals for people.
Put that cash into the market why isn't it happening you have more even more than we've seen you know we see the -- here and there but nothing crazy.
Companies that concerned right now about venturing out they that in nature that is good for their product they gonna be selective and that's good for them to do there will also -- That we ought definitely out of recession but how is the F product doing they don't know them both now -- with 2010 looks like.
If they see a video they'll venture out a little if they don't they're gonna hold back from.
The companies themselves.
Need to look beyond what's -- fit in their product there's still real gun shy.
On the market but they know they've got to increase in earnings that's the key item in order to do that they're gonna have to increase sales.
Ordered increased algae do with the -- away -- building it up we go the best way which is going out and today we think death of that they're gonna go.
Still -- economist on the board to be having that kind of a general comment that said seeing that the average investors kind of getting squeezed out of the market.
-- -- added this really the market right now and the big guys middle guys kind of -- -- together.
Or do you see evidence the -- of -- average investor in this -- Is that they moved to the -- investor and a small company.
But again companies are concerned about what they're doing and they need to be very selective in that -- Necessarily buying a whole company.
And they go take pieces and divisions into of that couple years ago.
I think she avoid.
Big cap S&P 500 companies -- avoid and -- small units this thought -- But they gonna be looking for now is quick sale -- didn't go to the manufacturing incivility situations.
That they that they can they had to fail right away and then.
Take it down to bottom with the margin being so much -- -- out because of the cost cuts.
Tried to give us an example here give us -- or whether it's sectors and maybe even better individual companies that are in this opposition Q tradition work.
Well it obviously the finances have their -- headaches right now sure and actively do too much and they want this to the government.
To states somebody -- a consumer discretionary you'll also have to deal with their balance -- staple this Sunday we feel we look at a lot.
Being in health care as well as technology both -- -- have great balance sheets in -- daughter.
Technology has -- -- fifteen the thing that cash.
Help hit seventeen.
It looked -- of the 10% in shares and that's the beauty like she is better.
You couldn't buy it like the company -- buying -- it's tax -- not tax free protective but I get the -- -- got to hate cats sleeping though that two sectors that are going to go full already seen some of the drug mergers announced.
Did that help you think they'll be more they are two different -- guys sectors within health care.
Well what we've been affected that the -- -- obviously Biotech as well.
But it's going to depend on what's coming out of Washington is up 564 amendments that -- right now yeah and how it goes and how those items come out.
He's going to make a difference I'm not.
Just on to help -- -- the entire market with its enormous expenditure is coming from one area to another consumed with -- -- either directly or -- and into businesses.
So copies -- -- and and go after the market share and they gonna go after sales.
So those two sectors are going to be key plays in -- -- area.
You know what the bad things that we were attacking members live in the past that previous quarters has been dividends will be -- company slashed their dividend them.
As they can start it what it may just it's a -- interesting one -- if it -- say it.
It is 888 as a matter -- up dividends and now more than buybacks.
They've come back full circle Honda.
-- -- we think they've taken the bulk -- the hit it within Q4 is going to be a very big test period.
We've noticed a lot of companies both speak at bats woke up that is still paying dividend will be paid over the last 567.
Years in a low.
OK but they're not making the money this year and they didn't make it all last year.
If these companies do not see a better 2010.
When they do their reviews they gonna start cutting.
It's going to be dividends as well as it and pointman on this -- can afford the dividends did very key facts.
Did they look I'm sorry if they if they can they -- -- is that as far as the actual headlines okay.
That's connected to to a for the cuts the companies who haven't made enough yet wouldn't and not make it and it failed to admit to -- intended that -- -- on the dividend play but.
If you're not making the money you cannot continue.
Put your hand in your pocket yet it yet.
Try to to -- started a conversation Howard because we're all wondering what to look for in these -- in this earnings season as we head into the end of the year because we know already.
That that cops are big kid is being positive year over year -- that story's been told over and over and I would assume is in the market to some extent.
-- you say -- look for companies had to cut their dividends what else what are the other stories in the come out of -- -- -- season.
The sales how they're situated with sales and margins have been increased they all spoke about how they.
Cockpit video up -- down convict you gave -- active have you table saying I -- so many.
People for many heads so many -- that I went from 12 outs -- o'clock to eleven point six and so we're not sure how the log into created but they off Paul I have.
So open and that they have if sales are going to -- in improve going forward which is going to sink down to the bottom number.
The EPS don't get up to now being less bad is okay.
Fighting in the end -- Q3 and Q4 definitely you're gonna have to show the improvement.
Otherwise is going to be a lot of disappointment them off and again we grew up 57% -- those and watch.
Nine -- Well and as an analyst that one of the conversations that we've added that whether or not there's actually been I guess this made it our expectation that they're an analyst side.
Do you -- it.
Definitely go back -- a -- Iraq and.
In the Riviera I -- very very.
Rosy -- assuming that settle things come together and it's -- -- -- almost.
-- -- -- the -- -- is looking at the states are starting to spend the money that they've gotten from the federal government that consumers will continue to spend maybe now high margin -- But they will spend just as we thought it in the housing and automotive if you give a good price they're going get it if these things come together in sales are gonna pick up.
-- a lot of momentum in the market if these things do not.
Is going to be selected disappointments and if you've got sitting on a big gain -- that could do some profit -- we had no major cuts by the way.
-- I thought profit going since that macho Val yeah I mean.
-- -- -- that that's sort of see it.
We've got so caught up in this September kind of seasonal sell off and all that work without -- -- without taking into account this year is different than other years and and -- different times and they're -- -- but now it seems to me we really got to start thinking about the money coming off the table at the end of the year we started to have that conversation last year but it.
If you told some of these money managers that they were going to be up as much as they're probably up this year just by sitting in the market -- You know he told and that's certainly in late February early march tournament like -- -- -- -- but now they have those gains.
We've got to start -- and some of them right I -- is not something to think about it.
There may -- with -- we may be window dressing or to get out -- this underneath center the pension funds.
Did being pushed in order to.
Yet we tends to make up for -- up last year's losses.
And you've got to be in the market to get -- the problem is.
I'm happy with the -- and I'm not happy with the loss so to some -- game of chicken who's going first.
Yet we keep on sending a message -- of our viewers -- information out there.
The information that is companies is is available you're going to be able to find what's really going on well as they report their earnings that is seen that what you're telling its.
War is that.
As -- companies continue to push it he said to make up -- some of the lost ground they had over the last year.
Kids can really trust the numbers it we're seeing -- we're going to see over the next couple quarters.
Laughs I have some of the off balance sheet items.
You can who you can trust the top number that the problem -- the details that we're not getting how did you.
Get your number what did you cut this typically that's a long term gain net for the next sale was going to do much -- -- there one shot deal.
Also the momentum India people being told -- that you've got to be in a -- that you missed that 57 -- -- will they continue want you know all the news we're getting now.
Both the -- we're getting now.
Is on the upside even if it's -- less bad we'll such as housing and things.
So we're getting better news when you go back to begin media everything was big you couldn't find good -- -- the momentum is he up.
-- the problem is will the underlying fundamentals the earnings that sales of the consumer spending and cat that's the company's.
Will that follow though you know come toward the end of the yeah if it's not it disappointing if so then -- that who are more room to go -- -- This sounds like -- -- enormous question mark.
They're very DF -- time to invest mention things that are coming up 32 years -- it is a lot of things on the table.
Thank you Howard who evil leadership I sent them off -- -- gonna talk to -- How do you ever glad this -- PR we got two more things to do here is FDIC stories taken on -- kind of a life of its own today a lot of people are talking about it.
-- -- FTSE it is if it's Italy.
-- you have a little bit like a little bit of that I don't know how much -- to that.
Going on the New York between Sheila -- and Tim Geithner or just the idea.
How you end up funding the FTSE's funds anyway -- have come up on nine and Jeff fox at a good angle on each one and one next.
We had to wait a moment before we -- able to good it to Jeff Flock he wasn't necessarily ready to go not because he's always raining out now are you guys -- I think I think I was a little of his busy these folks who don't have retarded photographers -- -- that they didn't outright theft is -- -- I haven't.
-- -- -- it'll be years that we've been talk about thank god he's not hearing you right now our revealing back one angry man with a camera behind that.
But I digress I'm sure we're gonna move on -- is ready now he's good to go.
And we're good to go on a very exciting place which we -- you thank you for being with us today the CEO of lightweight who.
Foods what am -- watching.
You are watching lightweight keep -- being -- -- that's not -- -- word that ships off the -- of most Americans with -- a great accountability what is keeper.
It's -- concert -- where it like politics yogurt drink.
Similar to -- but with the -- quality.
It was a safe behind this we got a little bit of the product here this is a little in fact if you got a -- can't give you'll my microphone for a second hole.
It's gonna go on the up from all that'll go on the -- battle -- coming -- -- -- -- -- -- Coming out here as you do that OK -- We'll do our best that's.
Okay now we'll swap back.
What what is this.
-- they did everything.
We'll get -- -- -- can they can hear us.
It is a little bit of a cross between milk mediocre directors at -- very frank and why is as good -- drinking.
It fat -- might adaptive.
-- -- -- -- -- -- -- -- -- Keep president that would -- it with longevity.
And good health prior to that again.
Principle -- -- right -- put it during flight.
All microphone gets very audit of the year at this is not -- part of the give up okay great bulk of -- that the fact that Whitney that's very good.
Just -- Juli is one of the youngest CEOs of -- have a big company -- in America you're how old we didn't tell our viewers my finger on the business channel how old.
I'm thirty -- -- it's not polite to ask that question but when you're the CEO of a major company I think it works what we were seeing the production line here.
You have been able to grow this business.
Credibly if you're on the fortune 100 list of the fastest growing but small businesses -- American -- -- with the -- we go.
You have been CEO for seven years and -- what is the secret to the growth of this group.
Well I -- -- then able to be -- -- Create new product innovate new packaging design and we've only been able to save relevant -- -- right -- I can't really American.
Are hungry for healthy eating they want to be healthy and we are offering -- the list.
I'll tell about packaging I want to talk about this machine -- real briefly but first.
I gotta tell our viewers you within the last year in the midst of the worst credit crunch that -- can remember got financing supply your biggest competitor.
Millions of dollars in finance and how -- able -- level.
Well we spent duet with that very Scott can't have that sent great balance sheet.
And hit a bad couple let a great valuation that we were able pull -- off.
Everybody should be so lucky I get familiar with the car -- actually rally evaporated with like lean manufacturing practices with a very little wait for the company.
It can edit it if you go into it with -- strong position that many bad thing though that the companies that track and.
And you got a hell of a deal.
I can characterize it that way find the competitive.
Yeah I would -- I failed.
Beat the other previous.
Yep yep so you know if it was a great gal with the -- lot of good deals out right now.
-- -- Polanski will be what this all day on the Fox Business Network and now watching Kiefer being bottled.
Actually tastes pretty good their guys -- well and we'll -- yourself.
Thanks but I -- -- absolutely growers and try new things was pretty cool good work Jeff.
Thanks guys we're gonna hurry up let's send it back to you -- -- can go back and finish what he started hot hot hot hot hot -- -- what to get more.
Bob had to go to the -- here.
We author of the -- that some one point or another.
-- said Smith is.
Hey great today and -- -- can't nobody told you.
Thanks Bob wasn't and it's actually the idea that this FDIC story it is kind of like a popular talking about -- -- feel like because this thing is.
-- and let -- run out of money.
Right -- a few people -- that -- of the options are they could do have a special assessment on the banks which they've had once already that already easily could do that again war.
They could happen this treasury line and now I'm -- a billion dollars people want -- credit -- singers made a big deal Sheila -- taken.
Money from Tim Geithner is supposed -- just might come on -- -- and then we're.
To report that -- -- resident of the independent community bankers I'll quote him.
About what he says she how Sheila -- feels about Tim Geithner -- there would stigma and move shots under her nails before going to Timmy Geithner.
And the treasury for help so flat area well I have a campaign -- actually get together.
CN regulation that I -- -- some subtle yet.
So then the other option which is live one we're talking about is that the bank and -- borrow from banks themselves that are healthy to help the banks that are not right so there were talking about the FDIC knocking on the doors of those very same banks that they actually help bail out so.
So the new bailout that we might be looking at here but here's the thing the special assessment that the FDIC the problem with that is that they've got this insurance fund.
Would they rely -- to protect all of our bank accounts right.
So the special assessment if they were to.
You -- the special assessment gets all the banks that -- -- and the strong would have to pay the special assessment.
Well there's some concern about the weaker banks out there that they may face bankruptcy they may go down.
So what they're saying here is how we go to those stronger banks my note taking billions of dollars of loans from then.
And then got there -- -- -- but the point is the banks themselves support this because they see that is the best option -- something has to -- -- Brittany.
Did you that ultimately they would do that absolutely found that -- it.
Implicit government guarantee if you will -- because when they issued the money to the FTSE of the loans the FDIC.
They're giving them government bonds within -- -- that set by the treasury and the Treasury Secretary.
So in essence they're receiving government debt for this which is obviously a government implicit government guarantee -- the banks.
-- in -- -- might even be winning some Arafat or at least break even instead of paying the special assessment.
Then there are actually you know what they're making this loan that they could then be -- paid by the banks -- and -- everybody.
-- yes it's the ultimate irony is everybody's pointing out there isn't.
The god banks some of the bailed out by the government are now essentially -- right the government and here's here's the big question and hang.
I know that a lot of analysts have been writing about this today is.
Isn't there an obvious conflict of interest here you have the FDIC.
Obviously the regulator here are neither the government authority.
Loaning -- -- taking loans from the big banks that it actually regulate so.
Isn't there a little conflict of interest there isn't -- a little question whether there could be some this for Latin.
Some favors whoever so that's obviously a big question on the table as well but so far according to the report its.
Gathered some pretty strong report pretty strong reporter on both sides so.
A lot of banks you know might not have an issue with this whatsoever a lot of the stronger banks looks like this -- they're gonna go down.
It does look like this is the rat -- the -- they're gonna go down the treasury obviously as you mentioned that was one of the it's the one of the three big ones that are talked about as far as the options are to replenish -- insurance fund.
But you know there's lots of questions -- whatnot the F -- he would go to them why he tap into the treasury line of credit.
And all of -- sudden you're talking about another bail out the what kind of political outrage what you see from that.
And obviously you know we haven't seen more about that obviously she is very -- -- he would -- -- see anywhere that hit.
Tropical outraged if -- throughout their outrage animation again.
It must have been -- when he not now have announced.
That -- could see ahead thanks yeah.
And I think you need to apologize went for I actually -- an Arab states.
Our viewers he said we're going to be reckless.
And I did apologize I already issued an apology on our comment -- things on the -- that were not appropriate and they.
Now did surprise me yet again that I did I actually issued an apology.
Two the viewing public slightly surprised I've been actually looking a lot of the comments that didn't get approved and hardly any of them was appropriate.
Definite challenge for tomorrow.
Messages they consider this -- we said we're talking earlier Sander you say -- and he -- on the Internet so -- So watch your mouth about what they had a -- SES tomorrow at noon.
And does check us out of Hulu and iTunes and everywhere else -- -- down.
I think everybody did.
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