Some market bears are turning into bulls, with David Rosenberg, Gluskin Sheff & Associates, and Sam Zell, Equity Group Investments. Regarding the economy, says Zell, “We’re seeing a lot of uncertainty” in our businesses. What’s driving the markets, with Mario Gabelli, GAMCO Investors, and Sam Zell, Equity Group Investments. CNBC’s John Harwood reports on President Obama’s 2014 budget; and Sam Zell, Equity Group Investments and Alan Krueger, Council of Economic Advisers, discuss. Ex-KPMG partner Scott London says over the course of several years he divulged general information to a friend whose business was struggling, reports CNBC’s Kayla Tausche. London’s attorney, Harland Braun of Harland Braun Law Offices, offers insight. Discussing what’s impacting the real estate business, with Sam Zell, Equity Group Investments. “Commercial real estate is in the middle of a major transition,” he explains.
Videos and computer transcripts below:
this market just does not want to quit. even noted bear david rosenberg says he’s optimistic today. david is joining us right now, exclusively, to get more on this market. also with me for the hour, my co-host for the hour, sam zell, ceo of equity group investments. he’s going to — chairman of equity group investments, pardon me. he’s going to talk with me about real estate and this market. sam, really nice to have you on the program for the hour. my pleasure. really nice to have you.david, let me kick it off with you, because you’ve been bearish, and now you say you’re even bullish. well, i didn’t say that i wasnecessarily bullish. what i did say was an acknowledgement, basically, as to what’s driving this market. it’s interesting that all of the discussion is about how this rally has continued after thelousy isms that we’ve had, the lousy jobs number, the lousy nfib report that we got yesterday. and of course, the flip side,because bad news is good news, is that it means the fed isgoing to pump more liquidity in the market for a longer period of time. it’s not odd that japan and the u.s. are the leaders. they’re the only two countries embarking on this gargantuanquantitative easing that is really the linchpin behind what’s happening in the stock market. so it’s not about is somebodybearish or is somebody bullish or whether you’re agnostic, it’sreally about understanding what the principle driver of thismarket is. it’s clearly not the economy it’s clearly not earnings.it’s the mother of all liquidity-driven rallies that i’ve seen in my lifetime, and it’s continuing. and it’s continuing meaning you have to be there, you donate want to fight the fed, is what you’re saying? well, i think that’s a pretty glib comment to say, don’t fight the fed, because you could have fought the fed in 2008 and in 2009 and done quite well. it’s understanding that as long as the economy is not in recession, as long as the fed is pumping liquidity into the system, you’re probably going to have the market, the natural tendency will be to go up rather than down.that much is true, until something breaks. and at some point, either it’s the inflation or the economy starts the to reaccelerate and then we’ll have a different market. but for the time being, i think your assessment is pretty correct. sam, let’s talk about the federal reserve and all this easy money. clearly, with rock-bottom interest rates, you just don’t have any alternatives to stocks. what’s your view on all of this? well, i just think that whawe’re doing is we’re debasing our currencies around the world.the net effect of which, i mean, if you reduce the value of thecurrency, at some point, you’re also going to reduce its buyingpower. and ultimately that translates into a lot of inflation. i don’t know when, obviously, what we’re seeing here is like a giant tsunami of liquidity, but i don’t know that that necessarily means that things are better. and in fact, i think the level of uncertainty may, in fact, reach a point where people are just throwing money, because they don’t know what else to do with it. would you put money into the stock market today? i’m always –investing, sure. — so the answer is, would by increasing my position, no. i just think that this is a very treacherous market and, yes, it’s gone up every day, and yes, you’re not supposed to fight the fed. but you don’t have to necessarily fight the fed, ifyou want to sit on sidelines. i want to get more into real estate later on in this show, because i know you are obviously putting money to work there. but, what’s your take in terms of the u.s. economy right now? you said it doesn’t necessarily mean that anything’s getting better. so from the front lines, where you sit, how do things look? obviously, it depends very much on what businesses you’re talking about. i would tell you that in ourbusinesses, we’re definitely not seeing, you know, overly strongconditions. we’re seeing a lot of uncertainty leading to peoplemaking, you know, deferring decisions. on the other hand, if you want to talk about the apartment business, eqr is doingphenomenal, and i think we’re starting to see the beginning of a serious resurgence in the commercial real estate side. in the commercial real estate. you were looki some, not bubbling up, but some movement in commercial like a year ago when we spoke. that’s still sort of where it was. yeah. there’s a real desire to solve the problems, and an awful lot of the problems, going all the way back to 2007, haven’t been dealt with. david, let me ask you the same question that i asked sam there.would you put new money to work in the stock market, after whatyou just said? i mean, basically, what you said is really being mimicked, sam is saying the same thing. it is what it is, is the federal reserve. t buwould you want to put money to work in stocks, knowing what we know? maria, when i was on one ofthe cnbc shows last week, when it looked like we werecorrecting, the question was put to me, what would you do in apullback? and the answer is that we would probably be allocating money into the areas that we like, which has been the classic dividend growth, dividend coverage, dividend payout, the real income orientation part of the u.s. stock market. so on a pullback, the answer is yes. in other words, we just hit newhighs. but right now, we’re comfortable being between 45 and 50% exposed to equities and the parts of the market that we like. there are other parts of the tal structure, credit spreads are still look to be fair value right now. there are still other parts ofthe capital structure that look good to us. but in terms of chasing the market right now with the highs, you know, i don’t think thatthis is the operative strategy. it would be actually to move in at a pullback. you know, it’s interesting. do you want to buy the market when the economy is looking shaky and you’re hitting new highs or do you want to really go long the market like you were four years ago, when the economy isn’t looking to — when the economy is not looks that great and you’re at the lows. so i think right now, my sense would be to, you know, still keep your powder dry and we do guess a correction coming, it will be a opportunity. but right now i agree with the other person you’re interview, that it’s steady as she goes. i think that this feels likethe housing market of 2006. everybody can’t, you know, can’tafford to miss it. uh-oh. well, but that’s exactly what happened.houses are going up every day. but wait a second, wait asecond. because in 2006, prices for homes were going up, but for what reason? no real reason. what’s the reason the stockmarket is going up? the federal reserve has created an environment where rates are at rock-bottom earnings and corporate earnings — but — how about the fact that thecorporate balance sheets are so strong, $3 trillion of cash