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All there was -- that he hell I didn't think it was good and so but if they come on apparently -- -- figured out that -- But different -- I put something I just put us on the right now it's that come watch us on the web but with -- elegantly.
Comment about the article linked to the article because I like this you know when you have something written about you like to have people have a chance to read.
But that's just pointing out that you were that some of writing about you.
So do you know flock is ready to.
-- -- -- -- -- -- -- -- -- -- We're gonna have to it's a big deal to just have a huge interview and a few minutes on the Fox Business Network without -- -- we can't wait for that means that this Ford plant.
In Michigan so let's go to Jeff right off -- -- to see great hits today by the way I've been watching them all day.
If you had been somebody besides my Mother's -- here.
It's been a busy day you know it's really instinctive to the right in it in this -- -- it was worked.
With -- your take a look at this tigers got a -- -- is for me.
Michigan -- those.
-- -- public security -- Michigan truck plant.
They used to make the expedition in and prettier here pretty soon what the government here is the more fuel efficient electric modeling job.
Hewlett fiction Ford Focus.
-- It is that you were back on that box with network on the web here now it works local 900.
You can be very excited that -- gonna take -- it would shut down and turned it sounds like.
Car that's we're all are very excited about the prospect of blue and bright future over the infield the focus to going green you know.
If it's going to be a battery car.
Yes yes you know how to build a -- half.
The bad idea but up until British should go to teachers really didn't look good bit bill -- -- -- become what you do.
Preparation that I -- -- it.
It was it was kind of like a pep rally here almost today -- had if we walk over here -- you can tell -- Still a bit of a kind of -- -- going on here and I'm looking for bill forward and while there's -- in the middle of another interview.
But you -- was built -- -- sort of set up.
The vision for this to.
You know what everybody thought it was kind of a dumb idea for Ford to go out there and and -- bunch of money maybe a year or two years ago.
-- -- question that business sense well.
Is it turned out they did it.
Before it became impossible to borrow money -- -- -- -- in a position to try and take advantage.
Of the situation take advantage frankly -- competitors that.
Are fighting for their lives right now instead of introducing new products and try to go forward guys.
Jeff what the downside -- became very heavy it's great that there's going to be some -- -- and there and that people are excited about this new product but.
This probably -- it again the market for some time right.
That is correct but you know what is on the market anymore if you -- have more.
Quick fashion Jan is take a look at this this is the fiesta we took a test drive with this with that Jim Farley the top marketing guys forward.
The other day this will come on the market sooner.
If you look at the Taurus that's over here.
-- -- -- That's Bob king who's -- big union leader here right now in the midst of another interview.
This is the -- over here this is you know on the market this summer so they -- have products that they have been developing -- -- a development that are coming out now.
And that new the -- the other when it's up there it can't see it from here but the media fusion hybrid.
That's out now so you know these guys are pretty well positioned to to take advantage you.
You know whatever else is going well but listen -- to bill forward because he's always got something intelligent to say let's just see what the reporters and talking and our times -- Competitively but I feel important.
But that is I think it's important that they really do that I think that you know we've been -- the market -- -- and it's certainly.
And out them in green technologies -- through the years and other things that.
It's almost sort of -- be in the Vegas.
That doesn't make any difference either which you have to be the best.
And I believe our strategy is the best division.
Plant coming out electric cars here one day.
It happened at -- can happen but it looked for that to happen -- have to have a very different national infrastructure on electricity.
And you know and that's certainly beyond our control will play at large part in that discussion.
But that will require it's -- policy.
Major policy decisions and Washington.
And the utility.
Making major investments as well but -- -- where those who think that happens we'll be there with the vehicles absolutely.
Or did you lock box business oriented to -- -- your -- -- here right now.
Was -- that made you say I want to make that investment.
Early on one other people thought maybe not a Smart idea to borrow that kind of money.
Well you know first of all we do we get familiar feel -- borrow the money we had a transformation of the company had a list and it was not just.
All the things you normally think -- in terms of print restructuring -- -- -- job cuts and losses but it was very much.
A reinvestment in new technology in and that new technologies.
-- -- rollout today.
And I feel really great about it here today in the news the headline is for no perhaps look at the buy Saturn we've got to obviously got interested everyone from around the world now look at that jump.
Into the US market in some way would you say that you are uniquely positioned as -- American company to take advantage of what is to come what do what do they see in this market that other people may be.
Don't look great market obviously it's it's you know it in and when and when the economy is is good at the mark the -- a lot of money and I do like or position we're not in the acquisition mode and all we are all about -- in our own plan and if so far I feel really good about the fact that it's working.
But we're not there yet we've got a lot of lot of hard work ahead of us -- so.
You know for us.
To declare success at this point is wrong we we we have we we've got -- great about where we are we've got a long way to go.
I would appreciate the time for thanks very much billboard live here on the Fox Business Network it's always trying to get to the latest he was a Smart guy.
And I guess he remains a Smart guy at this point.
Great job -- have you run into that's why is a good lesson reporting in Boston standstill -- we're doing live shots just walking around in the room to.
Yet Alan Mulally by the way -- -- fine yeah I'd get -- -- the CEO I'd that's just a few minutes away right on the networks and tell us if you wanna turn over television and watch that.
I'll -- Tom go beyond what you expect to find out that in view.
We're gonna have mr.
Mulally only 1230 on the Fox Business Network.
And then we'll have -- -- at 1235 or 36 on the Fox News Channel so in -- go to the web you go to the business network you go to the news channel we get at all.
Hey -- hey guess what the question their viewers are so excited about that I your gas city and your shot today they're they're coming fast and furious with the questions and comments.
The big point is though it is -- -- out of the woods we're still focused and GM and Chrysler is the problem children.
Well now and I think you just heard built -- they had I think -- that the viewers is is right on the money it is he just said.
-- we are not declaring success here we are uniquely positioned we think.
For a turnaround by.
That's not to say that they are out of the woods -- the US car market data which obviously you know -- this this market yielded 1415.
A billion annual sales.
This car has to be successful this horse has to be successful.
The economy needs to come back around and more people need to buy cars because if you've got -- an annual sales rate the US -- eight or nine million cars.
There's not too many companies that are going to be making money at that.
Right -- none of the big companies at that kind of a sales rate we're gonna make money maybe you know Hyundai or something as small operation here it's small overhead.
But not a -- -- not a GM not a Chrysler.
They're not then and -- -- frankly not a Toyota either trying to make money in this market -- that kind of -- sales.
He injected -- -- -- at the foreign by staying when he came out in 1964 in 1965.
They sold in 1965 I think more than a half million of those mustang CIA looking at the new -- Last year they sold 1910071965.
They sold more than a half million mustang.
Last year they -- 90000 in just shows how much the industry's changed.
Well exactly and if you want to go back to my hero you know that the model T had to essentially 90% market share.
Which you know can you imagine one vehicle one company one model having 90% of -- obviously things do change but the economy that that that scale.
Is tremendous although they do so a lot of F 150s now -- example of a bathroom you know -- that that's that's a huge win now but that's gone away and it's got to be replaced by something.
Perhaps the -- -- happy the mustang again but it's got to be something.
Oh sorry yes I there's multiple people talking me at the same time I -- you know it's interesting I don't remember -- it was behind diet I'm CEO or the toyotas and I'm not -- -- sources correctly that there is a comment about -- Because the -- -- brought acting on the model T air act.
There were no gas stations we forget that that the whole infrastructure out of the auto industry had to be built based basically on that model.
And so there's a lot of questions and criticism about -- making this move but.
You know they changed the infrastructure before.
I guess at the big question is what -- infrastructure changes that have to happen for an electric car really to catch on there.
Well the big thing that this different from that -- yeah gas stations had to be built you know out of nothing I mean that had to be totally created.
The thing about the electric power grid -- -- it needs to be updated certainly.
That already exist and they're making them now so you can go plug and then in your house so you know the plug is right there.
-- he simply got update the infrastructure and now obviously bring more capacity on but it's it's very different that that transformation to take place you make a great point about.
You know obviously with a multi was around they didn't have gas -- they had to build a -- well.
You know we've got plugs -- ask Allen Molly.
Well I'd I'd I'd like to get a little bit of insight in.
If he could give us some back story on what he wants to do what how he can take advantage of this that Chrysler and GM situation.
I mean you -- you -- to put him on the spot like that say what can you do this through your competition on this but I mean essentially.
They would like to come away with this.
-- come away from this with tremendously great a bigger market share.
And you know I mean that's that's what they would like to do and they would like to take it away from GM.
And and Chrysler and you see mark fields over here at the president Americas and his great assistant Jennifer.
They are the guys that are responsible for doing this we talked to mark last week.
Out of the proving ground and these are the guys that are responsible for executing this -- making that happen.
It's -- wanna get in his -- a little bit and see what.
What specifically they want you to do that.
We look forward to it that's -- -- minutes away now or so little less -- on fox business and then right after that.
If you're one of these unlucky people who is now Fox Business Network and who wants to for the Fox News Channel right -- touched Jeff great job by the way I can't wait jacket hey thanks guys for creating intelligent discussion thank you -- -- we're down again right.
Are all right Jeff Flock live out of Michigan so we'll look forward -- that straight to Robert Gray who is with the -- with some breaking news when he got.
Yeah that's right General Motors may be hitting the exit ramp.
Out of the Dow Jones Industrial Average why you ask well.
We broke it down this morning on the network and you may have mentioned already this complicated.
-- share issuance are gonna do some sixty billion shares.
That General Motors would -- -- exchange for debt to the US government bond holders also the United Auto Workers Union.
They have 64 billion dollars worth of debt after they draw down a little bit more from treasury that they're planning to -- -- two point six billion more.
This would it affect.
Then convert these into common shares take the shares down to a penny.
Been -- -- -- -- what one for 100 taking it just barely above a hundred -- the long route to get where we're going because it would give.
Majority control of General Motors they would have controlled General Motors well.
I've just got off the phone with John -- -- he's the editor and executive director of the Dow Jones indexes basically he and his boss decide.
The thirty members the constituency if you will of the Dow Jones average so.
I just talked to him and he said you know -- -- this government control is a gain changer he told me.
The government control in bankruptcy put a company on a different playing field and other companies.
And -- -- -- as a result.
Quote that's a disqualifying event.
That would hold true for any of them so basically this -- -- we've -- the president with AIG in September the last time the Dow was changed.
AIG was out after -- place today -- conservative ship.
With the US government Kraft Foods went and dollars and right after Lehman Brothers collapse and AIG.
Collapsing as well that same weekend all right so let's be clear on this it's.
This is not a guy obviously that surprised that you -- talking for months but you know being up -- the the report today.
Is that GM.
Would be out if this happens if they -- -- and a file this with the SEC last night a big gave the blueprint right we've talked about it.
What would happen and the government would have a controlling stake.
It doesn't have to be majority but -- controlling stake that's what's key here don't have that what they 51% majority they have to have the controlling stake.
At whatever percentage it works out to be doesn't matter they aren't controlling.
Then they went and -- did tell -- normally they don't comment on speculation but she has tipped their hand with this SEC filings say given him and his words a heads up right so.
He's -- -- country for two weeks finally we've -- -- do you watch every morning ladies and wondering when it's coming out and that's.
Perhaps why he just got back literally into the office this morning when I spoke to -- not.
More than an hour after you got into the office mean.
Good job so that's it sucks that's obviously good news we've been with the Iraqis that we've been waiting for this -- -- that it looks like it's gonna happen now with a parlor games are gonna begin guys who the other poll we should put out.
We just put up a poll about whether or not to -- should be done maybe we can help with this and get some choices now it's going to be who takes the play.
That's right who takes place and not only GM to keep a watch on city if they convert this preferred it's.
He told me the game is still playing with -- -- -- that convert as preferred the government takes a controlling stake Citigroup.
May -- GM down at exit ramp Bank of America possibility as well.
Plus not only that guys he told me financials and as anyone who's been -- market is not as big a part of the market as they were last year when they added -- and that's when we start to talk about us.
In what what are the names that well that are really being for Google not a good choice member price weighted average growth rate of 400 dollars a share so as Google went the Dow would be really skewed by that right so this is -- market cap weighted.
Cisco would be a good possibility apple talked about a lot because it's its consumer it's also electronics is -- You know it's -- all -- wrapped in their health -- also he tipped his hand a little bit he told me as of Sargent one month ago he said as of a month ago health care was under way to health care stuff that engine and volatility billion dollar market -- no Biotech in there.
In the -- so so -- System when they explain why what is this significance when a company gets out of the Dow can hop back and watch again -- fact as well.
Has been out of the Dow they were first to in 1915 their place US rubber at that time they're kicked out -- -- -- 1916 and unclear why.
They -- rejoining 1925 -- -- probably love this their place Studebaker.
And I cannot.
It's -- -- it's interesting -- and keep in mind utilities they have their own average they would not be a candidate.
No transports not a Kennedy -- it was a no FedEx coming in which.
You know this -- health care to -- health care seem to be the leading candidates Ford could also come back and I -- -- -- -- -- -- of them come with AB CD so we can you do -- once they get you -- you -- like Ford Ford.
Christian is probably what one of the largest health care companies -- -- -- -- act quickly was able to come up with fifty billion dollars it's not in there.
-- you can also like apple and or a barrel Cisco says he wanted to our profit Minnesota a lot of people talking about that great.
Someone else on Liz MacDonald on FB and I just did the report with them mention Pepsi because they do for delay and they've got -- -- saying.
This is -- -- it can't get back to significant changes the personality of the market a bit when you looking at downing chasing this thirty companies it doesn't really moves.
It went except those thirty companies -- is important because it reflects eastern part of our market in our our priorities almost allies.
As an economy many of those our biggest I mean how.
How do we it is the biggest company -- have a representation.
And this is the argument he is the last time -- is on with us a couple months ago for keeping GM in the Dow.
Is it represents the industrial part of our comfort of our nation.
You know of the workforce and not only because -- shrinking market cap.
Not as much of an issue to them as -- the representation is a larger company afford they still sell more cars and Ford.
But what you have to look at is is it a reflection of our economy today and that's what they're trying to capture that's the most difficult thing.
To keep in mind is that's -- we talk about the I mean not to say mean obviously it's the Dow is still whatever when.
You know the -- -- in the stock market is -- it's the stock market went up today they're always talking about the doubt it's like parents are real it's a headline grabber but there's a real.
Discussion of significance of the Dow vs say the S&P 500 which is a much broader.
Gauge of stock markets 500 companies in the Dow this -- have this discussion Dow Jones Industrial Average with what you just thirtieth and or elite club right and that's it -- because again and market weight.
Get you in and out of the S&P 500 for the most part but for the -- are -- it.
That how much the shares they have outstanding time you know at times the share price basically and early leaders apple would.
44% and apple.
35% for the elderly but -- you have.
He also want to think about in terms of the Dow.
Not nearly as much money tracks it but you mentioned the headline driver -- -- -- CL a sizable amount of cash attracts just the Dow thirty people try to emulated.
Money managers to investors do you ETFs that track it's a there's a lot of money that goes in and -- of GM goes out.
Then you know people would don't GM who follow this type of investment investing strategy.
Interest -- the job for so that's really fascinating.
It's and you know -- really haven't had -- History to right its editor in thirteen year old index Armenia so it's it's the oldest it's been around forever yeah right so it -- -- -- the 18100.
With SEC have to approve what they filed and that would be that would.
Being that -- that the approval of the shares are -- and that is still went that went through then.
They'll be the last straw unless they.
Trying to get out ahead of that right which is what we've been caught talking about in every parking yet for the past few months that witness in this now Roberts has yet that happens they're done so good -- so that's that they're out there and we didn't we have been.
And I says half so we know and that we have an if then anyway yes good car and then general -- It's cotton and that's better than that and I think that's I think that's tax and you'll only hear that here don't exist -- -- -- you know.
You got to -- -- about Robert.
I'm good at stuff that area that I think that's great you -- follow you appearance when I.
-- -- -- All right talk to -- an update straight.
And we will follow up on -- our viewers been talking about it and that's a great part about the shows that we do get the instant feedback on the polls again.
Our viewers think Apple's leading candidate to replace to him that hey it's it's it's fun to talk about at least with -- they -- At number two GM Ford and who -- maybe so anyway that's the that's the report right now now.
We want to get to -- guys or tips to Xenia in this order so -- okay so that they here's the deal this is booked out.
I think this is fast that it's making this -- badly and remark upon it minutes in the next forty minutes really respect I think we're -- That nothing to do about at least pictures that we've done so far as talk about our own selves on Twitter through.
I -- the second Great Depression right not to say there were in the second Great Depression at some point.
Do -- where she wrote it solid Warren explaining himself but the whole point -- thanks for joining us at a bus South Carolina.
Is that he -- tried to write a book a few years ago and nobody wanted to hear anything in fact he couldn't get into a big publishing houses to publish it.
And then just about everything or most of many things in the book start coming true.
Then it from the publishers knocking down what I want to -- a book is is is that the is that basically the way it worked.
Yes actually read the book you have that this second Great Depression was the first book and I wrote that in 2004.
And because my background is engineering.
I'm not an economist.
I had earlier written two books -- we're quite successful -- -- had access to major publishers.
But when I went to them -- that book.
They don't want to touch it with a ten foot pole.
Because they set I didn't have the right background.
And they said what I was predicting what's radical.
So I basically went with a small publisher.
And then last year John Wiley came back to me and said well if you'll -- -- that book.
Will we will publish it with a new name and a new name and -- book that is how now is the Great Depression of that great depression and.
It -- -- you see as an engineer.
-- may -- other economists did not.
I'm not only an engineer but that first two books like published -- on somebody called six sigma.
Which is a statistically based -- -- problem solving.
And so I tend to have a lot of expertise -- data analysis.
And I looked at this in a strict data.
A valuation method.
I think the economists often times use.
-- Mathematical models of the economy.
And the problem with history or -- the economy.
Is it reminds it doesn't necessarily we peaked and it repeats only enough to get in trouble.
And I think the economists were using models that were wrong because they did not have.
I mean we certainly never had -- debt issue like we did recently.
We never had the housing issues we never had people taking on the savings at the rate they were taking and they -- for the things I used to -- Okay price should it -- it and we can't predict seeing Atlantis February or not their mom let me stop you there for checking his -- to have a way to fix it to highly doubt it.
We don't have a way to fix it we have to live through it.
This thing has only started to go down we have to repay that debt we have spent the next couple years of discretionary money.
And the consumers have to get back to living within their means.
Paying down debt and get back to savings and that's going to be a painful process and all the people the same economists that we're saying we weren't gonna have a depression.
I'm now saying the things and we all over this fall on their wrong.
-- -- -- -- Well.
It won't bottom out for another two or three years and then until -- take.
Many years before our economy gets back to what we would call a healthy state.
Well that was well -- the work out the fact that we have spent all this money -- paycheck.
We remember when we were talking we -- -- -- your book forms Donald everybody yesterday and Peter's point was.
A time is the only thing that -- this so that's what -- is saying as well illicit I'm glad the book got published right finally so -- but that was the whole point of this is that.
People who were saying things like this.
You couple years ago five years ago in this case or thereabouts we just not getting listen to and it turns out hey maybe we should be listening earlier than we -- -- Warren thank you very much for joining us.
From from South Carolina really appreciate it thank you -- we're gonna have we have a couple things we're gonna do here it would be get -- down in a few minutes.
To -- going to Washington and the stress tests -- that's good reporting by the likes of which is exclusive today.
If you haven't heard some of these details that -- on that.
And the Bank of America stuff but also on the assumptions being made in the stress test that was going back to the whole club -- -- article yesterday about how dire things were doctors yes doctored.
So Peters that's one covering them NASA wanted to talk to him we we will -- -- -- CD's is here from -- capital management.
The talk markets with this could -- -- -- thanks for coming and we appreciate it so I mean today's economy.
We -- talking it's a little bit earlier or -- about TV also that this today's been a fascinating day in a lot of ways that we started off this morning saying.
Well 34 billion for Bank of America while we're really in trouble here this is a lot more than ten billion the stock was tanking and -- All of the sudden and you know.
About 8 o'clock in the morning really starts to turn around and it was up to twelve bucks which is where it is right now.
What did you make of all that and and who's right who's wrong and and what does this mean that Bank of America apparently -- 34 billion dollars -- think.
Firstly the people that were wrong people that are short BankAmerica or under invest in financial and they've been proven wrong last four weeks it's completely irrational I agree but.
I think that this goes back to.
You know November when.
A lot of people in the hedge fund community were starting to realize that.
Having Washington in bed with Wall Street is really a strange little animal right -- Bernie frank on TV every day we have Chuck Schumer on TV more than normal.
And it's a little -- which is a -- right and that is so what you have in this process is a Washington like.
-- a Linear function to these things so when someone comes out as Wells Fargo needs.
Tens of billions of dollars bank America needs tens of billions dollars obviously terrible news right but.
Clearly not unexpected and in a very Washington kind of way this stuff was leaked out OK Washington doesn't like to surprise anybody -- anything.
And when they have their hands on Wall Street right they like to get this information out so they can kind of -- a balloon and not surprisingly one.
It's a very Washington way of doing things.
To pretend like they're not into dangerous I don't think so I think it's healthy it's just an -- customary way for us to do things we like things to be a surprise.
If Intel's gonna release earnings they're gonna be terrible they like to let the analysts know they like to let shareholders know they like to leak it out they don't -- a terrible number and take the stock.
These stocks started to digest how bad this was going to be a week ago -- Washington was pretending like they weren't leaking out the information.
Washington is never not -- that information it's -- functions.
So I think we saw that this morning it wasn't ADP number in that short squeezing it's what it's all factored into the stocks.
Any stocks have great for shareholder base in -- to have.
It really that Smart.
And the collective.
We that's -- that's I don't know but according to explain that break -- little bit you can because it is that we were joking right about Twitter earlier but -- Was one of our -- and if you saw this one of our viewers that responded to us this morning when we were talking on the air saying you know what's going on here I thought essence of what we ask is it.
Why is this stock up after it was down so much and maybe you can go into a little bit of this because it is -- this is kind of hedge fund world which is a -- mystery a little bit to the -- the retail investor that says.
Well I know what maybe it was -- -- but why wasn't a factor it's 7 o'clock this morning when the stock was getting here.
Sure I mean it's -- environment at that point it did trade millions of shares down a dollar yeah but then you've got.
You know you you really have a heavy dose of Europe involved in the stock like there was a lot of irrational factors.
And they ran additional hours what's happening now Iraq and what -- may mean and it -- let's say you're right irrational is kind of where the market finds its way right.
And that's rational so it's not for me to say.
This stock is insolvent.
At seven dollars after buying Merrill Lynch.
Or you know once once the feds involved and can do some financial engineering.
And the entire shareholder base is kind of transitioned out of the stock and -- didn't -- was the eleven dollars certainly seems like it's gonna -- three million shares there today saw -- along.
That they know what Warren botnet is an interesting point about and it did to the second Great Depression or what rain right now and he -- he -- he -- bottom line is that we spent too much.
Yeah and and we're gonna half that we -- -- stop the narrowing the temper tantrum whether we're consumers or businesses.
And you got to deal with what you did and so we re air regardless of Washington's relationship if companies have to deal with what they did -- investors need to deal with what they did Taylor is making some of his bats.
I'm what with some questionable practice fair share.
So what do you do about that mean you can now say the market kind of makes sense right now.
Are we just delaying the inevitable that we delay in calling Bank of America insolvent for example well.
I think the import you -- on three really important things for people look at in the market.
You have the stock market which we all like to look at as the barometer when someone says if you ask the question of an engineer who's very -- wrote a book wins this going to be over.
What we've really kind of means is -- stock market gonna go up in a regular fashion when is the credit market going to be healthy.
The answer the question -- he gives instead which is more academic is -- is the economy going to be healthy.
And -- is our capital market system going to be healthy and doesn't really things that we need to look at we need to make sure that we -- we are looking at the mall on different levels the economy.
It's still very much and it down which directory.
When's -- -- bottom I'm not sure war.
I'll let the economist kind of tell me.
What are the balance sheets gonna clean up from what I need to do to clean them up that's gonna take a little while longer but there are healthy companies out there but if that because -- creative accounting.
In some cases it absolutely is but there are regular normal run of the mill company like like -- regular there they're healthy a lot of our.
You know a lot of the more cyclical non leveraged companies are healthy so they their reliant on the economy turning without violence.
While blue -- example.
That McDermott MDR nightmare basic but -- basic materials company.
They're heavily involved in the industrial space the stock has about seven dollars in cash mystery at nine dollars -- its -- Bomb they need the economy to turn around.
That's all they need they don't need.
The commercial paper market to free up they don't need.
You know financial engineering more leverage they don't need to -- -- debt they're just a normal cyclical company already run a lot to seventeen year.
Absolutely they're not holding a fitting -- lot of space that's right because people have decided that maybe we're going to get.
Some kind of stabilization into the fourth quarter -- -- he's willing to say that's what's gonna happen unless of course it doesn't happen -- that won't.
And basically we're gonna hear that the Bernanke for really like another three form I -- I think it might be his job to try to stabilize things by you know.
Feeding some euphoria that we don't believe in Washington.
I mean it depends what they're telling me.
-- loaded question if there ever -- That's a good iron out right heavy I really it seems they -- -- this is interesting we would have a confident.
It was -- Washington is so involved here right it's hard because for example Bank of America retirement yesterday.
We saw their earnings report we saw their first quarter -- this question about sustainability.
But -- a public company and has a lot of its its -- out there he is today and any of the government telling you something different -- causing this problem.
Who do you trust that.
I don't trust bank America and I don't think it's their fault I don't think Ken Lewis is necessarily saying anything.
That's purposely sinister we have two giant companies that were.
-- -- -- -- That are that are emerging and it's finger in the wind to tell you what -- where we're going to be able to do 20102011.
They're trying to figure out whether or not a mark to market basis there even.
They're even solvent I did like Morgan Stanley's numbers you had to look at something think there's a company.
Reeled in a lot of risk he didn't really capitalize.
On the huge bond market rally we had in the first quarter John -- just kind of shrugged analysts were a little shocked that they didn't have the same kind of numbers that Goldman did.
But then they put it behind and they say look we're not going to be valuing Goldman on our Morgan forever as a small hair cut to book value which means it should trade at twenty dollars -- Once they bring in this Smith Barney retail business there's things really worth about 26 point seven dollars if they're not gonna have the same kind of risks they used to in the go go days.
And you know investment banking turns around maybe -- Sox were 2728 dollars and they look like Merrill Lynch did back in the boring days like 2000001.
Huge retail distribution low -- on the capital markets side.
And they start getting valued as a percentage of you know I'm like -- Our guys in Morgan by the way yeah it is it is the only real Morgan Stanley but it isn't interest -- company from where we've been in you know.
Think about where Morgan Stanley was really on the brink we were talking of the -- yesterday and I remember standing -- for the building that and wondering whether or not the company was -- get through the day right.
Number I mean it was John -- and I was eternal they are that's him getting you know lifeline thrown -- them.
-- -- -- It's that he should get 10%.
Billion dollars -- into.
He may have been in them because we -- by Citigroup Bank of America.
And -- -- -- the last week and a half percent but JPMorgan.
Morgan Stanley we don't hear.
Those names leaked by Washington yet they've stayed out of the news and and I think it's his JPMorgan really stepped up to the plate in the Bear Stearns situation.
Yeah they don't really cash in bed with Washington so Jamie -- play that hand very very well so.
I think they do have a bit of a cleaner balance sheet from chase was not as aggressive on the commercial lending side as some of their sisters and Brothers or mom.
And they had a healthy business they were able to bring in some of that healthier businesses from Bear Stearns because the way it was handled right but yet they've been -- you know they've enabled us to stay clear.
A couple quick notes -- -- on the Fox Business Network right now Jeff Flock to the seat speaking with.
Alan Mulally of Ford the CEO there seem to check that -- on television if you like we're talking -- is -- from -- capital management.
Now I think if you talk a little bit we talk -- thank you obviously but let's talk about some other things that are in the news and today for example I know I think -- liked -- pointed out the strength and energy stocks and that was the stronger before came in here anyway besides that -- even better than financial was the strongest group -- -- SP 500 was the energy stocks today.
Does that -- gonna continue you know I think it I think it does continue.
Awhile and long a lot of energy stocks off I didn't mention it as I have been on -- that's all you care about right when people -- to stop listening yeah a lot of really positive things going on you know we.
You you hate.
If you're an investor weather here you know just kind of a big individual investor or even a small individual investor are you running your own hedge -- you're running a giant hedge fund.
You love hearing ideas that are very new and makes sense on a lot of levels as opposed to getting them from the Wall Street Journal.
And then hearing him from you know a guy -- Someone in the media and having your salesman at Goldman Sachs can't say he what do you think about buying this and it's like such a crowded old trade -- fully out there.
Crude was down whatever hundred -- there is natural gas is down from twelve to three something.
And no one's ever gonna use anymore energy there's never going to be a long term kind I -- it was just so grim.
And and so he had an and then across the spectrum yet.
Yet refiners in the large ESP guys you know everything was setting up for it to just be terrible.
And all of a sudden you started seeing some big names buying energy.
And the story made sense they were bringing -- -- as they utilization way down meaning rig count.
They're just weren't any rigs that made -- want to be long natural gas and because if we get one nice early summer storm any kind of recovery in the economy.
A hot summer which use a lot of natural gas.
A return of industrialization -- -- uses natural gas and also natural -- six dollars Arnold you like Nat -- and -- a lot of exactly -- six dollars the natural gas companies start having higher profitability is his natural gas gets about five or six dollars.
A lot of the last leveraged companies make it on a month.
Certainly you're saying it's really commodity story now not this is now families I actually if you were lucky enough to be there which is mean which means you may 2530%.
A lot of these energy needs.
I would be law I would be lightening up on some of them like I -- XTO.
-- -- -- through you know ten days and made it twelve dollars.
It's and I would be lightening up next you -- and buying more natural gas commodity or are they sending in and now you're trading advice can you hang.
For just a second with us because we want to get to Peter we are waiting for Peter Barnes in Washington because he sensed great reporting on the stress tests which will talk to -- -- about also.
You can -- -- Wallace chatting on the -- does that work with Jeff Flock live as we speak to check that out on TV.
Peter the latest if you can on the on the stress test.
Well -- guys in the next couple of hours we're gonna get some more details more guidelines from the treasury and the -- Until the five page document that will lay out.
More specifics about the stress test and how they're gonna announce that what they mean.
Some of the capital benchmarks that they're looking for the time line.
For banks that are ordered to raise more capital.
-- also working on.
Guidelines -- much are they gonna come out in this paper drop in the next hour but there is of course now concerned that if some of these banks start to convert.
Their government preferred shares into common stock that in fact the treasury could end up in control of some of these banks you know 50% plus.
Owning 50% plus plus of the common so somewhere in this process there also gonna give us guidelines on how they played two.
Manage of those shares one thing that they talked about previously as putting those shares into trust.
To try to.
In theory limit the influence of the government.
On the island company strategy and decision making so we're expecting those guidelines again sometime a little bit later this afternoon and right conduct.
Why was just an Ascap.
Peter about the the year how strong the we were talking about this morning and in relation to the revealing article yesterday how how the how stringent these test results or -- stress test actually war.
To begin with and maybe go back over some of the details of what you've worn -- -- what kind of changes the game in terms of how much capital the banks have to raise vs how that's -- expected him to race.
Talk about -- that's correct well what sources -- -- that.
In fact as they were in the process -- administering the stress tests and within the last couple of weeks that the regulators actually decided it's tough enough.
Their assumptions here to actually.
Over forced the banks to run the numbers with.
Expectations projections of higher even higher losses on their -- portfolios higher losses.
For Iraq credit cards up for auto loans for commercial loans for mortgages in fact one analyst telling me this morning who had knowledge of this.
Saying that some of these assumptions that now are in her words close to depression.
-- -- Assumptions huge losses on -- loan portfolios -- originally.
When they and then they when they -- -- the metrics for the stress tests a couple of weeks ago we thought that about a half a dozen of them of the nineteen banks getting tested.
Might be forced to raise capital now it's going to be about -- so close and a half.
And the amount of capital that they could be required to make.
To race has been increased particularly in the case of a bank like Bank of America.
Because of these tougher assumptions and so they did change the game the rules a little -- in the middle of the game I'm told that's got some people migrate but.
The reality is that this is.
Part of the idea here is to -- up.
They want to get this all done.
They want to wrap it up they do what they wanna do -- one time they don't want to have to go back.
And do this again in six months -- -- -- want the banks to take one hit now.
Catholic on it lines wrapped up by yeah -- Knowing what -- you differently if I am very X yes I'm actually I'm -- Now -- like to Europe.
Our daughter lives over in London so we'll get a portraying -- in the end they just made it official that their career that there are getting together taking airborne however in the plane -- Peter.
We know -- anything happening.
Well I'm going despite what the vice president's.
Not with your bad -- Peter -- thank you very much.
A group signed here to present day foxnews.com anyway getting updates because they're owns the wolves -- -- Volkswagen is do you he had been living in the limited -- -- -- -- like I love cars yes you know Porsche and Volkswagen are coming together to create a new company -- -- company they're calling it they say they're gonna have ten brands.
And they want to ensure the independence Tiffany's brand so -- they're -- fairly strong Biden -- strong recognition we think we're strong recognition we think Volkswagen.
So that's that's looks at what we're seeing.
-- -- tracking.
Like Angelina right.
-- that is seeking a basis for decision on the joint company within four weeks apparently there's sensor timeframe here and they're gonna continue to work through -- Porsche and Volkswagen -- -- -- All right so you're gonna Fox News Channel for a minute shall be right back as she wishes and -- -- -- They really are out will be watching over the our viewers will be -- that certainly on the TV's father watching confusing unite on on television or Internet from.
You're you don't hit Peter which is -- it's -- which is interesting is this this whole metrics right to the stress test right now they say.
All right well we're gonna make an assumption of such as this and unemployment rate in these types of losses now it appears reporting is right and apparently they toughened it up at the end -- tell anybody -- today are told Peter today.
Now that but that's any kind of changes all these.
Headlines when we see -- -- -- has to raise.
You know thirty billion or twenty billion well it may be -- that's a little bit more than we expected because they're testing and a little bit tougher than than we we yeah I mean maybe they're gonna.
Try to throw up the balance sheets the problem with the this -- as they like to call it over among them is.
That it's that if the government's going to back the securities there issuing right it's not an entirely credible process so.
The government's gonna allow them to issue preferred that are backed by the company if the government's -- as they did with.
-- Goldman although not through their recent issuing allow them to issue you know government backed paper to raise this money.
Then it's not really incredibly relevant it's just the government giving away more money to trip to balance sheets.
And that's I think -- the stocks have started to respond a little favorably because our.
All they're saying is we're gonna get past this we're gonna raise money in -- public market to the extent we can't raise money in the public market.
And we're going to be someone held captive.
To the government but we're going to be able to raise money for the government as well.
So that it's it's significantly more complicated than that across the capital structure from raising money through equity through a rights offering -- A secondary issue and raising -- -- to prefer market which many of them worry -- exchange into equity.
Or just straight raising money through it you know that the big corporate bond market -- but.
At the end of the day it's just degrees of dilution and delete -- degrees of kind of bad but as long is.
As the government is standing behind their back it they're going to true up these balance -- It's so but but the measures that we're talking about -- and everybody I think knows this -- now as we've mentioned so all our.
Inherently -- to two current shareholders now the question is how much of that is priced in but to you when you read about this and try to evaluated.
Is it still -- diluted from current levels and maybe we should be careful we see these stocks run or no it all is priced in yet.
I mean who knows and that's a tough that's a tough golf tough today stocks are you play out today it's not only on living to make kind of predictor answer that question right -- -- this this is a lot of shorts are just getting are covering today or I don't think it's.
I mean it's really people putting new money to war I mean there's lots degrees of people that'll be involved in this that'll be.
You know long only guys -- just say we're out of the woods it'll be momentum guys say the stock's gone from five to eleven I gotta buy it.
They'll be shorts that are covering it can't believe the stocks not seven and it's going to twelve so there's a lot of different things at play right I don't know that.
I don't know that they all are saying.
This stock is now worth twelve in the dilution isn't so much it's so bad -- of -- all our you know different arguments different levels of frustration and euphoria.
And that's kind of got it here.
I think that's a good plans on trying to get to the bottom of and I think we over think these things sometimes -- we see these docs from because you have to remember everybody's individual positions before let's go to just a couple words on.
Odd jobs may be.
A lot of us were surprised to see this ADP report and -- argue.
About how important that number is another change the methodology and everything else may be it's more Portman used to -- -- But it was it was down it was bad but it wasn't as bad as we thought down -- -- 91000 so what does that mean for Friday if anything.
For the big jobs report and do you change your assumptions on that and the way you traded.
I think the trajectory is still negative I think the market.
Is is is had a tremendous run if we saw a jobs number that was you know better than we're expecting -- less people lost their jobs.
You know it could lead us to another step higher but I think.
You know longer term thirty to sixty days and I think the market is had a tremendous run.
I think we're still gonna see further unemployment.
I you know -- I still think we get to a national level of around 10%.
I think the bigger and and and more critical issue for us to see -- on his underemployment.
People that are either.
Taking jobs where they used to make a 100000 dollars a year now they're making.
39000 dollars a year and they're waiting for another job to be able to feed their family or do I support the economy the right way.
Or they're working 25 hours a week when he used to work fifty hours a week.
These people -- even showing up in the data so that's really the underpinning of what's gonna make this economy from up a little bit.
And there are what's called under employment figures come -- Washington and they're they're pretty dire they're pretty grim and I think we already know them even if you know even if you're just in the middle of the country not even following Wall Street you recognize it in your community there's a lot of under employed people it's not in your own home.
So we need to -- see that starting to turn around.
Before I worry about whether or not we go from eight and a half to nine and a half percent national on.
One bright and we'll see where we go on -- -- and thanks for all the time today my pleasure to 'cause they're having fun -- -- from.
From Cali capital from -- capital management with us here on fox this is dot com live okay.
Next up -- be right back from the Fox News Channel that she's behind in just a moment but -- -- to down to the exchange and talked up for a few moments at least.
About this market with Teddy Weisberg great to see against -- -- what do you think of all this mean it's been.
I I was saying to Tim and you know we've talked about it -- kind of fascinating morning Donald is back and forth now afternoon.
About the banks and Bank of America who needs a lot and you know all set Don the rally keeps going at least for now.
Life that the market that clearly for the moment is that seems to be defined.
The -- logic.
The -- Certainly the financial sector news that the bank stress test is.
The number that it throwing around at least he anticipated -- -- -- America I think had a lot of folks that.
I'm going to work this morning think we're in for a pretty rough day.
But that market -- -- whatever reasons continued it basically ignore.
The bad news we did get that employment number that ADP -- today -- was certainly not good but not nearly as bad as expected.
Which kind of stepped it up from.
What tomorrow whether or another employment number -- bat that's not going to be right -- -- expected.
But the bottom line is that market clearly as -- shifted its focus.
Up on the historical point of view to a forward looking point of view which traditionally what markets do.
And I I guess that one can only conclude because of the continued strength and yet in the popular averages that the market as it looks ahead.
He's an improving US economy in the second half -- -- here right interesting.
The couple things -- -- let me go back to your first comment on the the market as you say defying logic.
What's the logic that it should be using what are logic who are you using -- you look at things well.
And maybe that's a -- where do you -- that.
I'd every opportunity I try to remind people that there -- that we've got you -- you know a lot to help.
About about a stock market or in -- individual.
Stocks they are priced progressed that much of it is clearly driven by human emotion.
But that the that a motion is basically triggered when one connects at bats to.
To what they read hear and see.
-- economic news that we continue to get clearly.
Is not is not that positive there are certainly signs -- out there but group we are still well.
You know well -- that on the dark side of the moon in terms of the economy and certainly in turn them.
That banks and a stress -- and it -- what have you pick your poison.
Markets tend to look ahead.
And it defies logic -- there are periods of time.
-- simply does not pay unfortunately to listen to folks like you and me.
Wouldn't pick up that financial papers.
Have that newspapers -- read the financial pages because the headline news.
Can remain dire and negative yet the stock market can put on.
A darned good performance and clearly we we haven't seen that you can call the rally whatever you like.
Put up 2000 points from the lows throughout 2000 points and there was a lot of money made.
You know I had petty its standing here I knew you held city for a long time he's still on NASDAQ.
Yes I don't buy sadly I definitely I do I got a few other flags that you do you want to talk about the losers.
But cities clearly -- that in that category yet that I own it.
Maybe you -- under your polling -- the -- that.
Well he stated if you come out they've read at the end of rethink about -- -- -- -- -- -- -- -- Well I think at all that have been -- I guess I -- games I've stuck my head in the sand.
Certainly had plenty of I have plenty of opportunities to sell -- along the way.
And in terms of putting -- that structure around how long I've -- that I bought the stock.
I think back in the early 90s19901991.
When the banks were confronted with -- dramatic Latin American loan crisis and that they -- had almost every major money center bank.
Out of business in the early nineties because of their vote for the Latin American loans.
And had been held at that long and have you seen a lot of ups and downs.
I simply felt that history hopefully and I would say hope is the key word here that -- This -- history would reward my patients and that in fact these big banks would would find solutions to their problem about every problem does have a solution.
And what's really needed is time now perhaps.
You know I'm gonna have to hold it for another.
Fifteen to sixteen years unfortunately I'm 69.
-- not that fifty and so -- speaking I don't know how much longer I'll have but I'm willing to give it some more time.
How come under lock -- a lot longer -- -- having come we appreciate your candor and your honesty it's all great to get the perspective though because.
And I you know.
-- we forget the market had weathered a lot of crisis just -- knowing gauge which crisis is.
The worst -- -- -- I well.
You know I think if I can't get a real quick you know the one thing about facts is that time seems to cure all -- it doesn't mean that every stock is gonna recover we know that.
Is it realistic and some facts completely blow up and disappear.
But to have a good companies with good franchises.
Make mistakes and that with time sometimes they have the ability to resurrect themselves.
We've heard that from a handful of very Smart people in the last couple days at TI -- word time thanks -- appreciate it thanks for coming on -- watching exceeding -- securities.
At the exchange very kind of -- ever have taken on here.
Paying their right to adapt -- You know it's interesting -- -- talking about what's gonna cure all this and what that all this being the financial this financial crisis right -- yeah.
How for long maybe September's reading to to maybe not.
-- next up here what we're gonna talk to bill Rosenberg from the the Center for Public Integrity who knew there was such a thing right.
And he's they'd done a study on what led to all this the meltdown in the markets and and the economy.
What the catalyst war and hopefully where we're gonna go from here but bill thanks for coming on the program we appreciate it and tell us.
The main points of what came out of that study that people should take a way to be something that surprised.
We went back and looked at the mortgage lending we went through 350 million mortgages over the last few years -- focused on the period 2004 to 2007 which was the kind of -- and crash of a sub prime mortgage lending.
We identified the sub prime 25 were calling up these are the main banks that actually were not banks that the people doing the sub prime lending.
Well we found out the main point we found out is that in fact all of those sub prime -- five.
Twenty of whom are now out of business but they were in fact financed bankrolled if you will by the major banks that are being bailed out by the federal government.
So all of these sub prime lenders we're actually supported financed by the main -- banks.
And that was that the gist of the study there's much more in it and there's detailed reporting on each of those -- 25 but.
Like going through the 350 million mortgages and looking at this we could see who was who -- the prime sub prime lenders and where they did their lending.
So the suggestion is that the government was.
Complicit in what's happening is that there is or you are the -- are the terms.
No I'd say -- government clearly this is a catastrophic.
Catastrophic failure of government regulation really.
You look at that three tripod the three legs of the failure in fact it's the sub prime lenders it's the major banks that finance them because they -- those securities to -- And it's government regulation that in fact allow this to happen so those three parts are what we focus on and the three working together.
It was a disaster that actually could have been avoided because part of our project went back and looked at the warnings that were issued.
When people were saying if you don't regulate this kind of predatory lending.
We in fact it will cause systemic damage to our system not only the United States but possibly around the world this was said again and again and again -- course.
It was ignored and we did not regulate that kind of lending and we've had the results that I think we all know.
Out now this study.
Correct me if I'm wrong gave -- pretty much exclusively looked at that age issue which a lot of people brought up good lack of regulation.
Another say well you know there are other things this is who's sort of the perfect perfect storm in a lot of ways.
What about the historically low interest rates stay low for so long -- sent people on a search for yield far flung places and you know that got us in trouble as well.
Is it fair to just point the finger directly at the the regulatory issue even if it was a contributing factor as the cause of this or is that overdue and.
Clearly there are a lot of things -- in the credit default swaps the interest rates as you point out that we because of the tech bubble.
Bursting in 2000 and then 2001.
We had 9/11 so we basically had low interest rates that did feel this there's no question that.
There -- things feeling it but if we had regulated predatory lending.
At a time in the early two thousands and even later if we had said you know this is really going to cause damage.
It -- it would have made a huge difference in what.
Is really happened is because the securitization.
Of these mortgage backed securities with so profitable that's really what role more and more and more subprime lending.
And we have a graph and a report that just shows that incredibly steep.
Ride -- this thing through 20052006.
Until 2007 when of course it it crashed and went away and twentieth I said Tony of these subprime lenders the top subprime lenders are now out of business.
It was that there was a time when we could've looked at this and our members of congress did not regulate it did not support that.
And of course they were taking major contributions from many of these same financial institutions which also has to be pointed out and is part of our study.
But this this is what happened and I think it's important for us to understand this and for people to understand.
These three elements contributed to what took place.
Right because bill and the question that comes from this again we get back to the core question even asking how long is who you trust in the situation now like this -- -- now anyways for multitude of different.
Different matters so what do we do moving forward.
Well we're a big believer in you know transparency and accountability I think the first thing to do is understand what took place.
We haven't heard a lot from the major banks about their.
Responsibilities we haven't heard a lot from the federal government about its catastrophic.
Catastrophic failure of regulation here.
So those things would be good to understand so -- I think it's clearly we can go forward and understand this but.
We need that transparency and accountability and that's really why we did this project and spent the last six months digging into all of these mortgages to tell the story.
And well thank you for telling it to us today it's nice to get another voice on this and other.
I'm perspective certainly some and then obviously -- a lot of research behind -- as well bill thanks for coming on today we appreciate it.
My pleasure thank you at -- DC with the -- and a couple minutes we have left it down to question Bonnie and check in on.
On the NASDAQ action and it's interesting -- we had a I know -- a lot going on.
We have -- website -- Robert Gray with some great reporting earlier told us that General Motors is on its way out of the Dow provided the plan -- on the table goes forward that was the -- if -- so we said we should take its place.
I was about to say Apple's in the lead now Ford is just -- taken -- 4138%.
For the next down and it just.
Well yeah it is interesting because technology eight bit -- those who represented.
The amalgamation -- representation of all of the industries that leader economy of course technology's been a huge part about that part of that.
So it's interesting I'm not surprised that the Microsoft -- -- in the world are being on Microsoft's and -- over the Eagles and apples in the world are being thrown out there one of the top stories that we're talking about here in NASDAQ is Amazon and the company's you know at least at that.
500 bucks they'll be available later on this summer and really what they're trying to push is this new convergence and and -- -- -- -- hard books textbooks newspapers and and reading them on their e-book reader -- screen is two and a half.
Times bigger than the old 1 was -- and the companies experimenting with six different universities including pace university at Princeton.
Other universities out there so the days of highlighting your textbooks and flagging with post notes posted notes and all those things.
As Amazon's really trying to push -- shift in how we -- and read information.
Yeah it looks you know it looks interest and we talked about -- marks yesterday real -- haven't seen it in person yet right I -- they had the -- country couldn't get over to look at the idea.
Is certainly continue ousting mr.
Clayton the idea of the universities and the education is actually more interest in a lot of ways and read newspapers.
It's a whole shift in how we consume how we consume information I can't imagine studying chemistry -- all those things -- -- -- -- market your notebooks and Amanda's writing notes my friends in my text -- that was highlighting things I was doing all sorts of things.
But that -- look this is that this is the way things are going and iphones are out there now commonplace to wipe out an e-book reader to read.
Well for the -- -- down that -- in.
Trying to do.
Old school for -- and let the getting like buying the -- that kind.
-- isolated like buy books -- on its body thanks appreciate it good enough guys check on the podcast on iTunes that.
Getting available you're getting -- -- BF thirty seconds here.
Can't really say it.
-- getting too big for -- own good.
When talking about I think I think that it.
Well it's it's just a question.
Excellent idea I don't I don't think a lot of answers for I did I asked questions.
That we've that the chances in the coming.
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