Has Trump succeeded in the hardest task of turning around the sentiment of CEOs? How will cryptocurrency affect the markets? How much longer until government gets involved? Does the current success of the markets have anything to do with the previous administration’s lack of experience in the private sector, unlike the current one? Is the market on stable footing yet? Fox Business Contributor, Scott Shellady joins Dan and Amy to discuss.
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Proft: Good morning, Dan and Amy. And jobs numbers for December out. The projection...or the data collection by ADP and Moody's, had a big number, 250,000 jobs for December, meaning 2.54 million new jobs in the year 2017. The Labor Department's numbers a bit lower, 148,000 jobs added in December, bringing the total number of new jobs created in President Trump's first year to a fairly robust 2.1 million jobs, in addition to the nice 3%+ GDP growth. Again, something we saw for three straight quarters, and we didn't see for 8 years under President Obama. Jacobson: Yep, and the unemployment rate stayed the same at 4.1%. Proft: For more on the numbers, and the meaning, and Dow 25,000... Jacobson: Woo, yeah! Let's not bury the lead, Dan! Proft: Well, that's PART of the lead. I dunno, look...Scott "The Cow Guy", Scott Shellady...he's a bit of a cynic. Jacobson: Y'think? Proft: He's not...not a rosy optimist, he's been warning us about this "economy on a sugar high" for many moons, I wonder if he's changing his tune. I wonder if he has... Jacobson: ...swinging from chandeliers this morning? Proft: Well, I wonder if he's liquidated all his assets and put them in Bitcoin. Jacobson: Ohhhh... Proft: For more on all these topics, we're pleased to be joined now by "Scott the Cow Guy", Scott Shellady, Fox Business News Contributor, Hi Scott! Shellady: Good morning. Yes, good morning. Jacobson: So, are you happy this morning? Proft: Umm...well I don't know, there's lots to talk about. There's such a mish-mash. I mean, there's a few other extenuating circumstances out there. I'd like to add to the fact that we've seen...I mean, you probably have it on the tips of your tongues, but the Dow year over year last year was up 25%. Proft: Right. Shellady: And the NASDAQ was up 28%. I mean, those are HUGE numbers. But we just had some information come across our desk that said that in the last 5 years, so 2012 to 2017, individual retail investors pulled one trillion dollars out of the market. So, this rally really hasn't been participated like everyone thinks it has been, and a lot of the money that's been put in has been institutional, and/or stock buybacks and stuff like that. So, maybe when we start to see the retail investor get back in, that's when you should really get out. Because usually that's how this thing all works out. Proft: Well, elaborate on that. Especially with the tax cuts getting and the prospect by some of our more optimistic supply-side friends like our friend Steve Moore, 4% GDP growth this year. Shellady: Well, you know...I've been doing it 30 years, guys, and I think that one significant thing that's different with Donald Trump this time around, the presidents we've had in the near past, is that he's...one of the most difficult things to turn around is sentiment. You can start to turn some of these economic indicators around with policy like tax cuts and the like...but at the end of the day, we're finally starting to see the sentiment morph into CEO's buying property, opening up their pockets, you know, spending money on equipment and the like, and that is the hardest thing to get done. See, psychological problems in the financial world are so scared, right? Nobody wants to talk about a recession, or deflation, because a lot of those deflationary issues are psychological, right? Nobody's spending money even though things are okay. There's a ton of books written on how to combat inflation, because that's not a problem that's really a psychological issue, that's more the financials. So Trump has done a great job psychologically turning around the country's psyche, and then that has been, I think, a really large part of this rally in stocks. Jacobson: How do you think Bitcoin, and all that stuff that Dan is dabbling in... Proft: Cryptocurrency. Jacobson: Cryptocurrency!...is going to affect the Stock Market? Shellady: I think it's way too early to get involved with those things, and I mean, our business is regulated...OVER-regulated, just like everybody else's, and I've had to take so many tests and exams and refresher courses over the last twenty years, and one of the first things they always want to warn us about is money laundering, right? "Does this customer really have the money, or is it coming from Russia?" So I think that Bitcoin and the likes, all the other coins that are out there, are going to be ripe...rife...with people laundering money. And I still think there's no way you're not going to have the government get involved where there's that type of thing easily going on. So way too early to tell if thing's really going to...I mean I love the BlockChain technology, and it's going to have some great applications. But as far as these Bitcoins and cryptocurrencies, it's too early to tell. The best way to say it is now we're in the Pioneer stage...and my definition of pioneer is "a guy with a coonskin cap, facedown in a puddle of muddy water with an arrow in his back", okay? That's where we're at with Bitcoin right now. Proft: *laughing* That's vivid! Thank you for that! Now, Paul Manafort did ask me to hold some of his assets, and deploy them, so that's why I've gotten into cryptocurrency, so I'm just saying. But go back to what you were saying before, particularly about your business being over-regulated. It seems to me, one of the under-reported stories...and we've tried to over-report it here to make up the difference...is the deregulation that's occurred in Trump's first year, or just the restraining the government from continuing to pile on new regulations, Trump famously said towards the end of the year "22 regulations repealed for every new regulation". And so you started to see the sentiment turn around and that GDP growth spike up well before any taxes were cut. Shellady: Yeah, and then that goes back to my point. He's been able to turn sentiment around just by doing a few things like regulation. That's gonna make the CEO feel like "Hey! We've got a business-minded guy in office for the first time in a while!" I mean, take a look at the people that were in office under the last administration, see how many of them ever really worked in the private sector. I mean, it's shocking to find out how many of them NEVER worked in the private sector. So, I also saw something that was...you probably..I don't know if you reported on this Dan, but Rasmussen came out with a poll at the end of the year...only last week...that said that Obama and Trump, they had almost identical approval ratings at the end of their first years. And I think, you know, Obama started real high and then slid down, and I think that Trump has rallied a little bit. But it's interesting to see that...at the end of the day, love him or hate him, and you know, he's easy to hate, I get it...but when you have a Stock Market that rallies 25% in one year, and the sentiment has done such a big turnaround, it's hard not to be excited about the future if you're a CEO in America. Proft: But do you still have the concerns that you've expressed on this show before...I mean, this was still during the campaign so still during President Obama's tenure mostly, but about, you know, the Feds tinkering with the money supply, and quantitative easing, and this kind of sugar high that the market was on, the economy was on? Or do you think that as the Fed has receded in terms of its tinkering, and you see the deregulation and now tax relief, that we're kind of getting past that, and we're on more stable footing. Shellady: No, I don't think we're on more stable footing. Not at all. I mean, we're now running up against a record of the longest amount of trading days without a 5% pullback, and the record was set in 1929. So, we have a Stock Market that has benefitted from stock buybacks and I mean, we haven't...the mergers and acquisitions...we haven't seen...even the 4.1% unemployment, Dan and Amy...how can we have 4.1% unemployment, which is almost a full percentage point below what...economists used to say that 5% was "full employment"...and look at the wage growth...the wage growth numbers come out today. I mean, they're tepid. They're not going DOWN, but they're really...if we really have a 4.1% unemployment rate, we should be ripping the faces off each other trying to employ people with higher wages! It's just not happening. So something's broken. And that's the problem that we can't figure out, and the Fed doesn't know the answer, or they obviously would have done it already, number one, and number two is they've ALWAYS been wrong, they've been consistently wrong. So look, I don't even know how you can say, in this environment, you have to raise rates, except for the fact those are people like the Jimmy Ayerero's (?), a good friend of mine, of the world that want to see some quote-unquote "normalization", and normalization is getting interest rates back up to a healthier level. But look, in 30 years of doing this job, you only ever raise interest rates in order to get out in front of an overheated economy or an economy that's about to overheat. And can anybody tell me if our economy's close to overheating, though? No! So we've got problems, and the Fed's at the charts...they're at the helm, and they don't know what to do. NOBODY knows what to do, and that's the problem. Proft: Alright, you used up your two violent metaphors. You got your ripping faces off each other, and you got your Davy Crockett face down in a puddle with an arrow in his back. So that's all we allot to any guest, Scott. Shellady: *laughing* Alright. Proft: Scott Shellady, "Scott the Cow Guy" Fox Business Contributor, Scott thanks so much for joining us, appreciate it. Shellady: Alright, thank you.