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Expert: These factors are slowing economic growth - YouTube
Channel: Fox Business
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markets this morning are higher in the
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triple digits we are looking at a pretty
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good opening this morning down
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industrial right now up 167 the s p up
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16 and the nasdaq higher by 52 stocks
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are rebounding after all three major
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indices finished near session lows
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yesterday there were concerns over a
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slowdown in the u.s economy and that
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certainly is creating worries uh about
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growth and we are also watching
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inflation this morning we get the
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producer price index ads coming out at 8
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30 a.m eastern joining me right now to
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talk about investing in this environment
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is labenthal global advisors president
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dominic tavela also joined the
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conversation all morning long this
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morning fox business is digging mcdowell
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and the hill columnist fox news
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contributor joe contra back with us this
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morning great to see everybody this
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morning thanks so much for being here
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dominic kicking things off with you are
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you worried about economic growth and
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the backdrop with which to invest
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well the evidence is starting to become
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clearer every single day maria you were
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spot on we're looking at things like
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covid which you know had a huge spike
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starting to roll over but it tapped the
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brakes on the economy we're seeing
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employees still not wanting to go back
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to work and companies not being able to
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hire that's putting tapping the brakes
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on economic growth we're seeing
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inflation that is forcing in both
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employers and companies not to go ahead
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with projects we have consumers not
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willing to spend that slowing economic
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growth so we have a number of these
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factors
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each one of them in itself maybe not
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dramatically affecting the economy but
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when you start putting them all together
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we are definitively seeing slowing
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economic growth we don't think it
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derails the recovery but it clearly is
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tapping the brakes
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yeah and and then there's also the
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unknown on the horizon right dominic i
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mean right now president biden is trying
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to jam through that three and a half
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trillion dollar spending package
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that's going to include much higher
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taxes you've got a list here of quote
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unquote offsets where they can raise
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revenue if we see a 43.4 percent capital
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gains tax
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a 28 to 30 percent corporate tax what
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does that do to the market do you want
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to start getting defensive
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uh you clearly have to so so we look at
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this from two perspectives the consumer
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when consumer confidence goes down it's
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clear as day they start to hold tighter
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on to their money and therefore they're
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not willing to spend it so when you they
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look at this kind of headline risk it
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really puts a damper on their spending
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on the other side which is the corporate
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side hey if my profits get cut by 5 10
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15 that's right down to the bottom line
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we look at the major indices today the s
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p 500 trading at about 22 times forward
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earnings that's on the expensive side
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but not outrageous
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you take away five ten twenty percent
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because our tax rates went up
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that number drops dramatically these
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markets have to correct so it would have
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significant economic both individual and
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corporate uh economic effect if they
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went ahead with these tax increases
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yeah i i agree with you on this
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especially since we're coming off of all
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of these record highs so this market is
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already going into any change in policy
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with the huge premium and then there's
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the china story and let's look first at
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the crackdown the chinese government now
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giving guidance on worker protections
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for ride hailing companies saying that
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these companies need to better
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distribute income to ensure best periods
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earlier in the week china also forbid
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those under 18 for playing video games
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for more than three hours a week dominic
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more rules coming from the ccp as it
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really does this power grab on so many
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industries all of this as president
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biden and chinese president xi jinping
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had a phone call last night we are
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trying to get the substance of that call
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and i'd like to know whether or not
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president biden once again skirted the
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issue of the coronavirus or did he
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actually confront xi jinping on the
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origins of this kerner virus what's your
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take on
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the china story whether it be the threat
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of the ccp wanting to uh overtake the
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united states as the number one
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superpower or china's new regulations
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are they affecting the way you allocate
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capital
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so two things this started earlier in
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the year they started cracking down into
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technology companies they were kind of
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all looked a little bit kind of what's
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going on over there this is a little
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weird it's not usually their behavior i
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mean they do control obviously their
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economy but they've kind of let their
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their industries their corporations kind
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of help grow
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their own uh net worth their own country
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net worth and and their own dominance
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economic dominance over the world all of
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a sudden they are really starting to
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crack down it's a rolling crack that way
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i think this is what surprised people
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they go from one industry to the next
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one to the next one to the next one so
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right now it's kind of been internal um
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clearly the chinese markets have been
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affected but if it starts affecting the
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supply chains and product coming out to
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us and the rest of the world that has
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significant economic impact if it
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affects how american businesses and you
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know it will maria if it affects
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american businesses being able to do
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business there
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um that has dramatic effect so we really
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have to watch this very very closely and
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i don't think we can be very passive as
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a country in a global uh
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interconnected world we can be very
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passive and just let them do whatever
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they want so i think a firm staff is in
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order and must happen
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yeah we're waiting for that uh policy
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that has any teeth on it out of the
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biden administration no luck so far
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dominic but we'll say about that because
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the ccp is we haven't even mentioned
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alphabet taiwan so
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there are significant geopolitical
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economic risks here
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yeah dominic it's good to get your take
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on all of that thanks so much
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thank you maria
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