The First Look - Adam Shapiro, Fox Business

Good morning and welcome to the financial exchange glad to be here with you on Thursday morning the 26 of April a day where it appears the futures are in negative territory at least they were few minutes ago June and he we still a lot in rough shape it's looking up pretty bad not crazy dad are buried the Dow futures down 33 NASDAQ down six S&P down four. A lot of red on the board ten year US treasury one point 937 down slightly gold is up sixty cents oil trading. Down one penny of course you know those weekly jobless claims coming in. And now disappointment for everybody -- You know Adam welcomed the show by the way are you doing happy Thursday. -- -- -- -- -- They know what what was your impression of those jobless claims that it may be -- Nigh eve but I I thought by this time we have those jobless claims under 350000. A week in and number 380 I I thought that was a terrible number. 388 were approaching had a 400000 credentialed and when you're there that's not good outlook not good now either we're seeing a slowdown -- the European recession. We saw a contraction in London just the other day we got there economic numbers and we're slowing down in the United States saw that -- durable goods orders so. As companies are slowing down we're not recession but it companies slowdown. People get out of it. So what do you think the GDP is doing that if you when we get our next GDP number. Is he gonna show that maybe our growth is under 2% one and a half -- it would what is this. That's the scary question isn't it that the expectation going to GDP tomorrow the the first quarter and that inspection Lou we are expecting that it's going to be the economists expecting two point 9%. But that's it depends which which group of economists polling in -- -- follow up. But there are other people say it's gonna be far lower than that that we have been slowing down and that they'll revised. 3% from the previous quarter -- -- So you see it reflected in the housing market we've had some very bad housing data housing sales as well as -- And and it's it's an underlying. -- that the foundation of the economy is just not healthy. Yeah now they in a guest. That's the that thing that I was I'm being caught by surprise and because. Data that we are getting in January February march was better than we thought do you think it was all weather related do you think we just got ahead of ourselves because we got an early spring. I get it and they call -- put pulling things forward a lot of people think that's what might have happened. But it's very easy to try and and and guess what it's -- -- what is causing that the underlying issues that has everyone nervous and the reason we're not out of this economic. Malays forgive me for quote with the Jimmy Carter. From the -- Is that they haven't fixed the financial system look at what's happening in Europe that's not an expert -- in -- reporting huge loss that. They say we have no exposure here but we do we exposure to credit default swaps. And people get very nervous how to protect the assets that may have so we've seen even -- the that was. For the year you know people are starting to think you know we need to take money off the table and tactics. So that's why we're seeing the yield on the ten year treasury so low member yet. People of trying to make that become the United States like it'd be you gonna buy you wanna buy -- -- in Europe. Now -- -- again. Well and added that explains why the ten year treasury in in early march the ten year treasury yield -- In high to forties and today it's at 193 right it. -- I don't know if it's a flight to safety which are seeing people. Protecting some of the -- stability in that packet. I wondering if it may be the Europeans are also buying our stocks you know maybe that's it maybe they've given up on the treasure they're not buying the treasury exclusively and they're saying you know what. Things are lousy in Europe so maybe the Chinese in the saudis in the Europeans are buying American companies as well. As American companies are raising dividends. You know -- if -- Buford didn't have players look at Exxon made its dividend today. How -- they go up by I I read the they were already got a credit. And they have they had a good dividend before they raced. Yet -- went up from 47% courtly 57 cents and you'll it's going to be some like to 28 2008 cents a share but a lot of companies are -- and it. And part of it is we need to attract that money that may be coming from other places. As you know this is -- should be investing in the efficiencies that that's the ante where by the way they used. In this medium business world to say the layoffs. And the cost cutting are just about squeezed out of the earnings there's not a whole lot more clout added that companies can view. When it comes in labor force -- -- large portion. Your your expenses the poignant. The companies that together way to attract investors raising -- dividends only. Well look at what happened to Cisco last year when they did that members I think they're stock price went up 25%. Gain in a matter of weeks after a racer dividend. Has that if they look what happened after apple announced its dividend at the mid nineties but that the different stories that. But you'll take it it just -- this brought up apple and I kind of agreement on but apple but you know you have such huge companies that can drive -- that apple -- -- Is really responsible a lot of gains. In the that oh that's right into one company influences. Yet if you don't own apple you're probably only up maybe three or 4% this year you know -- better if you're sitting in other stocks. I -- word Dow Chemical had a huge decline in profits they gave their profits dropped by about 50% what's going on there it's -- I'm sure I haven't been able to look into doubt I've been following you know we're very concentrated what's happening with the bank of the European banks -- they're earning reports -- But I haven't taken that that's. Fox is covering the story now about lenders trying to get the standards reduced to little bit and I got to tell you I was with the that fell a fellow that runs a mortgage company now he said. You know very good -- somebody who's got a credit score 78790. Ran the my voter -- -- he -- -- the hoops you have to jump through to refinance our absurd. I mean as I'm gonna give you real world example I hope my brother don't get angers me that you refinance trade unionism is what I'm. And my brother is the CEO of the company he has that that. They he presented. Three years' worth of income tax statements that. And they held up the the loan because they insisted on his W -- -- -- -- -- as you know I've been given you three years or income tax return. I wonder if they if the pendulum hasn't swung too far you know the EU I know we had very relaxed lending standards. Rate right up to 20062007. They were too relaxed obviously. But now I I I get the sense in the I think the banks are making good argument that you need to relax them a little bit and by doing that. That should inspire the economy that should get things. Well it potentially its standards you relax remember the banks -- the one lending to subprime it was the mortgage it was that'd be with these so called shadow banking system the unregulated lenders who relating to the subprime borrowers with less creditworthy borrowers. And the banks -- then dealt you know buy up those loans and then sell them to people. Securitized investments so that's what was going on. So nobody wants to recreate that world I hope you guys that would certainly be recipe for disaster. Now we shirt on I I read a stat the other day that some like 45%. Of the homes that were sold in 2006 were sold with no money down. -- man imagine that -- that's that's why we're still in that's why we're still licking our wounds over the housing crisis. Well again the you know credit induced recession -- take a lot longer become a unit of that the metric on that what's the book it's this time is different they put it -- that you should think about ten years to recover from the kind of financial collapse we had. Another six to go yeah unfortunately. But Japan with you know it takes twenty years yeah. But but getting back to this question about the banks and lending. You know there's. Part of the reason that lending is difficult it's not just in mortgages but look at the report we've been watching this week about TARP money and the community banks the smaller banks. Having difficulty paying back the TARP loans or even making their payments -- -- payments to the US treasury. On the TARP loan companies banks are very tight and needed traditionally the banks that -- these small business owner. Or you may be due to mortgage from them and then -- and that that's a big part of the problem. Pitcher is well Adam I again thank you very much for joining us appreciate your time always -- -- emigrate there aren't that Adam Shapiro from the Fox Business Network joining us today.