THE FOURTH QUARTER ON GENERAL
ELECTRIC.
JOINING US ETF DISTRIBUTOR
PRESIDENT SEAN OHARA, GOOD TO
SEE YOU.
>> GOOD MORNING.
MARIA: WHAT YOU'RE SEEING IN
TERMS OF ETF, HOW WOULD YOU
CHARACTERIZE THE EARNING SEASON,
GIVE US THE BACKDROP?
>> I THINK IT'S WHAT I WAS
TALKING ABOUT WHEN I WAS HERE.
WE GOT A LITTLE BIT SPOILED
PERHAPS IN 2018 WITH EARNINGS
GROWTH, 25, 26% AND RIGHT NOW WE
ARE GETTING IN PHASE IN THE
MARKET WHERE IT'S NOT
SUSTAINABLE TO CONTINUE TO DO
THAT.
WE ARE ADJUSTING TO WHAT'S GOING
ON WITH EARNINGS MORE THAN
ANYTHING.
>> I'M WONDERING MAYBE IF
EXPECTATIONS HAVE BEEN SET TOO
LOW.
WE HAVE BEEN DISCUSSING WHETHER
U.S. HIT 3% GROWTH THIS YEAR, I
MEAN, WHAT DOES IT MEAN IF WE
ARE GROWING AT 3%?
ARE THE STOCKS CHEAP AT THIS
POINT?
>> I DON'T KNOW THAT STOCKS ARE
NECESSARILY CHEAP.
IF YOU GET TO 3 AND A HALF OR 4%
THEN I THINK THEY ARE CHEAP.
THAT'S THE BIG WILD CARD.
ARE WE GOING TO GET THE ECONOMIC
GROWTH PARTICULARLY SINCE WE
DON'T KNOW YET WHAT THE EFFECT
ON THE ECONOMY WILL BE IN THE
SHUTDOWN.
THIS WAS NOT A NORMAL SHUTDOWN.
THIS WAS NOT LIKE 3 OR 4 DAYS
AND THEN SOMEBODY GAVE IN, THIS
WAS OVER A MONTH AND SO WE DON'T
KNOW EXACTLY WHAT IT IS YET.
MARIA: WHAT DO YOU THINK OF THE
FEDERAL RESERVE, EVEN TALKING
ABOUT THE BALANCE SHEET,
POSSIBLE PULLING BACK.
>> THERE'S GENERALLY BEEN
HEADWINDS FOR THE MARKETS, ONE
WHAT IS FED GOING TO DO, ONE WAS
TRADE AND CHINA AND THE THIRD IS
THE SLOWING EARNINGS THAT WE
TALKED ABOUT.
WHAT I SAW YESTERDAY AND WHAT I
THINK I HEARD YESTERDAY,
EVERYBODY HEARS THEIR OWN
INTERPRETATION OF WHAT'S GOING
ON BUT WHAT I HEARD IS THAT THE
FED WILL BE MORE ACCOMMODATIVE
THAN THEY HAVE BEEN AS FAR AS
POSTURE GOING FORWARD.
I DON'T KNOW IF THAT'S IN
REACTION TO THE STOCK MARKET, I
DON'T KNOW IF IT'S A REACTION
THEY SEE IN REGARDS TO EARNINGS
AND THE ECONOMY BUT I THINK ONE
OF THOSE HEADWINDS WAS REMOVED
YESTERDAY FROM WHAT PEOPLE'S
EXPECTATIONS ARE GOING FORWARD.
DAGEN:LY RAISE THIS ISSUE,
CLEARLY INVESTORS LOVE WHAT THEY
HEARD FROM THE FEDERAL RESERVE.
AT SOME POINT INVESTORS START
RINGING HANDS ABOUT THE ECONOMY,
ABOUT ECONOMIC GROWTH AROUND THE
GLOBE AND EVEN HERE AT HOME WE
HAVE SEEN WEAK GROWTH IN FRANCE,
GERMANY, THAT'S THE STORY IN THE
WALL STREET JOURNAL TODAY.
YOU HAVE A DIFFERENT REACTION IN
THE DAYS AHEAD WHEN PEOPLE
REALLY DIGEST WHOA, WHAT IS JAY
POWELL SEE IN THE ECONOMY.
>> CLEARLY TO ME THE EARNINGS
PIECE OF IT IS THE MOST
IMPORTANT PART.
THAT'S WHAT DRIVE STOCKS, I
THINK THAT'S THE BIG ONE, BUT IF
YOU'RE A LITTLE BIT OF SKEPTIC
AND YOU WANT TO BE A LITTLE BIT
MORE INTELLECTUALLY CURIOUS, IF
YOU WILL, YOU WILL DO WHAT
YOU'RE DOING, DAGEN, WHAT DO
THEY KNOW THAT THEY ARE NOT
TELLING US.
MARIA: IN THE LAST COUPLE OF
WEEKS WE WERE SEEING REAL ISSUES
IN EUROPE AND CHINA, WHETHER
IT'D BE FRANCE, THE BUDGET
ISSUES IN ITALY, BREXIT AND THE
UNCERTAINTY IN THE UK.
WE ARE MERELY GOING INTO THE
FED'S MEETING CHINA GROWTH HAS
SLOWED.
IN FACT, AS IT'S BECOMING MORE
WELL KNOWN THAT THE FEDERAL
RESERVE --
>> YES.
MARIA: I WASN'T STUNNED BY
YESTERDAY'S -- I WASN'T STUNNED
AT ALL, I WAS EXPECTING THE
FEDERAL RESERVE TO TELL US THEY
WERE ON HOLD.
>> WHAT I SAID I WAS STUNNED BY
HOW AGGRESSIVE I FEEL LIKE
POWELL WAS IN HIS POSITION
SAYING THAT WE WILL USE ANYTHING
WE HAVE INCLUDING THE BALANCE
SHEET.
THAT WAS THE MAIN ONE.
MARIA: WHAT DAGEN IS SAYING, THE
THE BACKDROP, WHAT THE FED IS
RECOGNIZING IS WHAT WE ARE
STARTING TO UNDERSTAND BETTER
AND THAT'S WE ARE TALKING ABOUT
A SLOWDOWN.
WE ARE LOOKING AT A SLOWDOWN AND
WE DON'T LIVE IN A VACUUM.
DAGEN: YOU KNOW WHY YOU WEREN'T
IMPRESSED BECAUSE OF INTERVIEW
WITH RAY DALIO.
WHAT DID HE SAY LAST WEEK, THE
FEDERAL RESERVE WILL NOT RAISE
THIS YEAR AND CAN CUT AND WILL
DO SOMETHING WITH BALANCE SHEET,
THAT'S WHAT THEY SAID.
I DON'T THINK THAT THE REST OF
THE MARKET QUITE DIGESTED THAT.
THEY NEED TO WATCH THE RAY DALIO
INTERVIEW.
MARIA: PRETTY MUCH UNANIMOUS
THAT WE ARE FACING U.S.
SLOWDOWN, WHAT WASN'T UNANIMOUS
IS HOW STEEP IT MIGHT BE, GE AND
DEBT, THE COMPANY'S DEBT IS
$100 BILLION, THE JOURNAL IS
REPORTING IF GE WOULD SELL
BUSINESS IT COULD ELIMINATE UP
TO $40 BILLION IN CORPORATE DEBT
, THE STOCK IS UP 2 AND A
QUARTER PERCENT, I DON'T KNOW.
THE EARNINGS IS A MISS BUT
PEOPLE LIKE THE FACT THAT THE
REVENUE IS BETTER.
>> LOW EXPECTATIONS AND STOCKS
GENERALLY.
BY THE WAY, I'M NOT SURE THE FED
HAS CHANGED ALL THAT MUCH.
WHAT WE ARE SEEING THIS IS THE
JAY POWELL STRATEGY OF WE ARE
NOT GOING TO LET LOCKED INTO A
LONG-TERM PLAN, WE WILL WATCH
THE DATA, AS YOU SAID THE MARKET
SIGNALS LATELY HAVE BEEN BAD,
INFLATION HAS BEEN MILD.
MARIA: THEY WERE ON AUTO PILOT.
50 BILLION A MONTH.
THAT'S THE PIVOT THAT I'M
ALLUDING TO.
>> IF IT GROWS FASTER THAN
CONSENSUS AND I HAPPEN TO THINK
IT PROBABLY WILL --
DAGEN: THEY MIGHT NOT HIKE AT
ALL LIKE RAY DALIO SAID, THEY
MIGHT END UP CUTTING FROM THE
LAST HIKE TO FIRST CUT, 6-MONTH
PERIOD, GRANT IT THEY NEED TO
SLOWDOWN BALANCE SHEET
REDUCTION, ONE THING THAT I WANT
TO NOTE, CONNECT GE, LEVEL OF
THERE, THAT'S WHY THE MARKET WAS
FREAKING OUT WHEN THE FED WAS
MOVING A QUARTER POINT EVERY 3
MONTHS BECAUSE OF THE LEVEL OF
DEBTEDNESS OF CORPORATIONS AND
INDEBTEDNESS AND WE ARE A NATION
THAT CAN'T HANDLE EVEN 3%
SHORT-TERM RATES AND THAT SHOULD
BE FRIGHTENING TO PEOPLE.
MARIA: YOU'VE SAID THAT A LOT.
SEAN OHARA, GREAT TO SEE YOU.
