Kevin O’Leary: This is a nail in the coffin for these hoping for Could perhaps presumably fee cuts

Back folks We are continuing to monitor the retaliatory US air strikes in Syria that's what the reports have and those air strikes have in fact begun um we're going to report several times over the course of the show uh with Grady Trimble and perhaps others uh helping us out but let's go back to the earlier business let's talk about today's job report and.

My riff and the likelihood the FED may not cut interest rates again in my lifetime we've got the great John Carney Breitbart economics and finan Senator and author or co-author of the Breitbart business digest we have my old and dear friend Douglas Holtz Ean Doug Ean is the former president a former director of the CBO and now president of American.

Action forum and Mr Wonderful Kevin oir chairman of O Ventures author of cold hard truth on business money and life and etc etc uh John H you're the closest I'm going to give you the first whack at this um this beat the street by twice let me just say ask you this uh I know I'm not going to name names I know a lot of people who are trying to shoot.

Holes in this and shoot it down right they are shall we say of the conservative persuasion they are people who I will say do not wish Joe Biden to be reelected I don't think they wish him harm they just don't want them reelected okay but I looked at these numbers up and down and I made some calls and as far as these numbers go which you're.

Always subject to revision they look pretty real to me what's your take yes they're very real if I take out all of the government jobs just 36,000 if I take out all the government adjacent jobs so the social assistance I come down to just to 27,000 jobs Larry that's a really good jobs report even if you take out all of.

The you know maybe not cyclically related jobs my heart yearns for honest reporting at times like this and I'll be the first guy to say every forecasting model was wrong about last year Federal Reserve CBO survey of professional forecasters cudow I was wrong there was no major slowdown or recession the economy is that actually this jobs.

Number looks like it's picking up steam it is picking up steam and what I think this means is not only is the March cut off the table the may cut is off the table maybe the June cut If the Fed doesn't cut by July I don't think they cut at all until after the election the November meeting starts the day after election day they can cut then they.

Pushed it back a day it's usually Tuesday Wednesday it's Wednesday Thursday in November they may not have a reason to cut I don't think they're going to cut at all I want to go to my old friend dear friend douge holsen who was a distinguished CBO director and an honest one and has running American action and he's been a presidential.

Advisor and he knows a whole lot about this St first of all Douglas great to see you second of all what do you make of these numbers I mean my take is I don't care what's your political persuasion sometimes the numbers are really the numbers yeah the numbers are the numbers and I was as surprised as anybody by.

These numbers um I I think the really important number is not the one in this report but it's the one you mentioned it's the productivity growth yeah the productivity growth in 2023 second half especially has come out of nowhere and productivity growth gives you a great luxury it allows you to have a Fed putting on a lot of restraint on demand.

And still have output grow without uh giving up the disinflation so everything broke the way of of growth and disinflation in 2023 my caution is things don't usually break your way all the time I mean there's going to be some bad news in in the next couple of months and we should be prepared for that and I think that's why the fed's extremely.

Cautious they have an economy that could very well have some inflationary pressures come back and they don't want to ease off too quickly well I agree with that point um and you know productivity Doug I mean you're an expert on a lot of stuff but you also follow the regulatory scene I mean productivity despite regulations maybe.

It's AI you know Quant Computing I'm not sure Kevin Hass thinks it has something to do with AI and we all know that he's a terribly smart guy but the point I'm making to you is the wage gains that are showing up in recent numbers to an extent Doug are being earned by better productivity oh there's no question about it you know uh another guy who.

With whom we do always agree uh uh you know Krugman has said famously in the long run productivity isn't everything but it's almost everything and so you know that's actually the truth great productivity growth forgives a lot of sense so that's what we got in 2023 here's the last thing Larry it's fueled the household spending but the.

Thing I'm worried about business fixed investment essentially flatten the second half of 2023 that can't persist if that doesn't recover we don't get the continued strength the household sector comes down to earth yeah well with this to the risk is there's too much demand chasing too few goods because the business sector has been dormant you're.

Exactly right Mr Wonderful Kevin o um I don't know why should the FED cut interest rates and it's interesting to me today Kevin the bond market sold off uh the tenure was up whatever 10 or 12 bips I think it closed around 410 412 okay but the stock market continues to rise so um Kevin how do you see it two things Larry number one why is.

This happening and I'm speculating that it's the digitization of the American economy that occurred during the pandemic margin all across the board in S&P 500 companies and small business have improved about 2 and a half% because they've cut out the middleman in distribution to direct to Consumer.

Models or direct B2B models you see that every whether you're looking at Nike or a business doing 500 million in sales anywhere in America number two on the FED issue uh this puts a nail in the coffin of anybody thinking they're going to cut rates in May you got a 75% productivity there where people bet betting that they'll they'll cut rates.

In fact the market thinks there's three Cuts 25 bips each coming right after the March which is a zero probability of a cut I don't see it um I think the problem is and it become you said it's not political these numbers it is going to be political you're going to see the incumbent the incumbent wants to talk about the economy wants to talk about.

Jobs but never ever do they want to be in a rising rate environment they want the FED to cut rates so the pressure politically on on on the FED cutting is going to be very high particular as you roll in to Q3 when it's magic to have a rate cut right before you're in the ballot Booth that's classic it doesn't matter who's in the in in the White.

House it really doesn't matter I think that's going to be an issue I of course it's an issue but my my point was a simpler Point actually and look I've been doing this stuff you know on TV radio government Wall Street for a long time you know one month doesn't make a political campaign people people get way too excited about it and as Doug HZ said.

You got a whole year to go and it's very we don't know whether this sustainable we don't know whether inflation's going to snap back again which it might in fact John Carney you've written about the possibility I mean J pal does worry that it would be like the 70s that the inflation rate snaps back again that's right I think there is a very good.

Chance that we've gotten all of the goods disinflation is pretty much washed out of the economy everything you were going to get from maybe increasing uh worker participation washed out of the economy all we have left really is for unless we get more productivity we will get more inflation so we if we keep growing productivity which by the way.

Nobody knows why it's happening as we were just exploring and we don't know whether it can continue so that's the big risk that's what J Powell's afraid of they don't want to raise they don't want to cut and then have to come back and raise so they are going to hold out I think Kevin o is absolutely right no cut in May no cut in June of my again in.

My we may actually but seriously rates may be permanently higher that's one the thing to get used to this is like the 90s it could be like the 90s but I'll tell you what's not like the 90s Doug holzen the 90s at least in the second term of Bill Clinton with n INR and the Republicans in the house you and I are both around for all this stuff we went.

Into Surplus so I just want to raise this point as a former director of what's that Larry what's a surplus yeah I know Surplus you're a former CBO director you're an honest CBO director Doug we are running $2 trillion deficits as far as the IE can see we are running deficits that are roughly 8% of GDP as far as the I can see in a peacetime.

Economy with a 3.7% unemployment rate I don't know how you get that whether you're left right or how do you get that or sustain that hey you don't sustain it it's not sustainable area it's something's got to give uh the other thing to point out is you know it's gotten worse while we're at full employment that's completely.

Irresponsible I mean you just do not expand the deficit of Full Employment we've done that and uh this is the biggest headwind to better Trend growth uh when you borrow a ton of money you're you're competing with the private sector everyone knows that but we're borrowing it to subsidized consumption which is fundamentally anti-growth so the.

Structure of the budget is wrong the financing the budget is wrong and we have a growth problem in the United States yeah we just had a a great fourth quarter but in the 21st century we're growing a percentage Point slower per capita than we did in the 20th century and that costs you a lot of money it's cost everybody in the United States.

20,000 bucks a year so far and it's getting bigger uh last 20 seconds Kevin o You're an ace what's your favorite investment favorite investment 20 seconds it's stay long equities USD right now we have an amazing economy just one thing Larry that bill I just read it that they're trying to pass and ramp through on it way to the Senate bad.

News for small business in there they're going to have the IRS auditing small business for a decade that they got to change that they got to change that well you know what they got to change a lot of things and all I'll say to that one is working on it John Carney brart thank you Kevin o as always Mr wonderful and douge holtzin great to see you.

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