Earnings per share. Wells fa fargo. The banks trading revenue fell 22 on a yearoveryear basis. The dow, nasdaq and s p hitting record highs. Walmart helping to push the s p into positive territory. The white house says it will end billions of dollars to insurers unless congress can reach a bipartisan deal on healthcare. Billions of dollars goes to offset costs to insurers. The wildfires raging in Northern California are the deadliest in the states history. At least 31 people are dead and 3,500 homes have been destroyed. They broke out mostly in the wine country and have covered 300 miles. Maria, back to you. Maria the Federal Reserve remains divide over just how quickly to raise Interest Rates. Janet yellens group remaining perplexed by persistent low inflation. But they say there is a rate hike come this december. My next guest is a titan in the bond world and one of the first wall streeters to predict donald trump would become the next president. Joining me is Jeffrey Gundlach. You have got assets under management at a record. 116 billion. You have got to put that money to work. Let me ask you about this idea about Interest Rates moving higher. Do you expect tonight december . Jeffrey gundlach yes, i do. The bond market expects it too. The things the fed seems most of focused on are the level of the stock market and the shape of the front part of the treasury market. From comparing yield on tbills, you can divine a probability that the bond market thinks the fed is going to raise rates. The fed never raises rates when the probability is below 70 . The treasury market certainly believes the fed will raise rates. The most of recent inflation numbers, and the core cpi, it was looking weak for five months in a row, the last one that came out was at the level the fed wants to see it. The ppi was. 4. And Commodity Prices have been rising. Gdp was pretty decent in the second quarter. My guess is for mid2s or so, even with the hurricanes. The fed has a lot of momentum towards raising rates. We went from the environment where the fed needed the data to get better. They said they were going to and they didnt. Starting in about february and march of this year, the feds shifted to a paradigm. They will keep raising rates if the data doesnt get worse. They are now back almost in the old school mindset. Allen greenspan and ben bernanke, they use thed to raise rates at every turn. Maria and the 2. 9 growth in the gdp. Jeff require was a flat line, then they got resides and it looks like they are in a rising trend again. 2. 9. With rate growth around 3 , i think it fed will raise rates along with the program they are advertising. Question is what is the economy going to do in response to the rate tightening. The fed wants to do three more next year. But the Balance Sheet rolloff, there is a cogent argument to be made that at quantity kay tough easing helped the economy and risk assets like the stock market. If you take it capitalization of the s p 500, and the ecb and the bank of japan and the fed, its almost a constant. Puck make the argument the stock market has been propelled by quantitative easing. If its taken away, it reduces that support and the fed is letting some of these bonds roll off. Well see what this Double Barrel of conditions really does. So far we have seen the relationship between short rates and long rates has compressed from a very high number compared to 2year to 10year yields. Now its kinds of average. There is a theme you hear Financial Media report that the yield curve is flat and signaling a recession its flatter than it was before. But its at the 40year average. To be signaling economic trouble you need the yield curve to come press further towards flat. Well see if that happens with the fed raising rates. Maria the jobs number with 2. 9 rate. Household income down. Sentiment while its up, people arent spending the way you would expect. Do you think inflation is here . Not really. The fed keeps saying as they said at the outset about why their inflation models dont work. He employment gets down to a certain level of inflation, wages are suppose to go up. The Unemployment Rate has gone to 4. 2 now. And wage growth has not come back anywhere close to the model. One economist had a clever saying saying the phillips curve flunks he con 101. Econ 101. Inflation isnt tipped towards the deflationary. But we havent been able to break up to 34 percent wage growth and i dont think we are going to with the feds putting on the brakes with raising Interest Rates. Still to come, does the bond king think washington can get tax plan passed . Its easy to think that all Money Managers are pretty much the same. But while some push High Commission investment products, Fisher Investments avoids them. Some advisers have hidden and layered fees. Fisher investments never does. And while some advisers are happy to earn commissions from you whether you do well or not, Fisher Investments fees are structured so we do better when you do better. Maybe thats why most of our clients come from other Money Managers. Fisher investments. Clearly better money management. Ca yes you can can i kick it . Yes you can can i kick it . Yes you can well im gone can i kick it . To all the people who can quest like a tribe does. With some big news about type 2 diabetes. You have type 2 diabetes, right . Yes. So let me ask you this. How does diabetes affect your heart . It doesnt, does it . Actually, it does. Type 2 diabetes can make you twice as likely to die from a cardiovascular event, like a heart attack or stroke. And with Heart Disease, your risk is even higher. You didnt know that. No. Yeah. But, wait, theres good news for adults who have type 2 diabetes and Heart Disease. Jardiance is the only type 2 diabetes pill with a lifesaving cardiovascular benefit. 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Tell your doctor about all the medicines you take and if you have any medical conditions. So now that you know all that, what do you think . That its time to think about jardiance. Ask your doctor about jardiance. And get to the heart of what matters. Welcome back to wall street week. Now more of marias interview with Jeffrey Gundlach. Maria there was scepticism going into the creation of the euro. Now weve see brexit and catalonia. Jeffrey gundlach the euro is at a local high. It was up to 1. 20. Its bent worst trade of the year for most of investors. The recommendation was 2017 is long on the dollar. We didnt fall into that trap because we realized its not shortterm fed spec taightss that drives the dollar. What drives the dollar is longerterm fed expectations. Expectations for the fed raising rates along with their plan, the bonds market isnt buying it. They are not buying the 2019 concept that the fed has at the 201 stat at the 2018 mark. The longerterm outlook of the fed is being disbelieved by the bond market. And that means the probabilities of the feds tightening a lot have come down. Thats why the dollar is down. You need the bond market to decide the fed is right. So far they arent buying into it. Maria we had a little bit of a creeping back. Jeffrey gundlach in the month of august the dollar had a year to date return the most of negative of the last 20 years. That suggests it was very oversold. You have goth gone do speculating against the dollar. We are par is paight in that in some of our funds where we decided to pare back on our dollar holdings. The dollar index dxy went down to 90. We think it makes it to 96. But the longerterm trends is down. Im more inclined to buy into and believe market based probabilities than i can ph. D economists. I have seen the market be right more than wrong on this. It means the fed may after doing the systematic tightening they are in. They may observe weaker data and maybe they will have to drop their dots. Maria its interesting to hear you say longer term the dollar will be down. When you have a guy in the white house who is all about america and getting Growth Numbers up. President trump is talking about 4 to 5 Economic Growth. Jeffrey gundlach its not going to happen. Labor force growth is 1 less naint used to be because of demographics its difficult to get back to sold school growth. You have to to old school growth. Labor force growth i think a High Economic growth is 3 . But we have been at 2 for the last how many years now. Six years . The price of bitcoin is surging. But is it a sound investment . [vo] when it comes to investing, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Announcer welcome back to wall street week. Here is Maria Bartiromo with Jeffrey Gundlach. Maria we are talk about tax reform and something new on healthcare with the president s executive order this past week. Do you think it tax plan moves needle on Economic Growth . Jeffrey gundlach it would if it gets passed. We are 03 on major legislative votes. The thing about trump thats so interesting. Hes such a disrupter and doer. But there has been a lot of gridlock. Its not just the democrats against the republicans. Its the democrats and republicans against trump. Having him there has almost increased the dysfunction in washington. Hes up to something that might work when you push increasing the standard deduction and trying to get a middle class tax cut. I think that kind of works bringing people together. But certainly getting a Corporate Tax rate down does wonders for justifying the valuation of the s p 500. I have been allocating capital nonu. S. Markets. Not that im bearish on the market, i havent been. In your they are noticeably lower. But the emerging markets follow an amazing trend. From oo to 2011 the movement of emerging Market Equities mirrored the percentage of gdp they make up. If you look at the World Markets it was moving up in the same trajectory as their gdp share that was going up smartly. Once quantitative easing came, suddenly it disconnected. The gdp continued to rise, but the market went down or sideways. Now its like alligator jaws. Here is the gdp and here is the market. Commodity prices went down and it had to do when the dollar win the. The dollar went up a lot from 2011 to this year. The dollar isnt going up anymore. I still think the next big move in the dollar is down aspect takes the fed is going to execute their plan diminish. Thats all supportive of none performance of u. S. Markets. Maria did you see what happened to bitcoin this week . Jeffrey gundlach over 5,000. Its speculation. Bitcoin had a tremendous move and there is a lot of believers in it. I got an email from my 86yearold mother when bitcoin was 4,500. Her cousins daughter said put all your money in bitcoin. And my mother said what do you think of that . I said these times of advertisements tend to come up after the big move has happened. Bitcoin a month ago was at 3,500. It changed by 50 in a month. Thats not a currency. I have seen it drop 10 in an hour. How do you buy a car with something thats changing value 10 while you are filling out the paperwork . Maria im feeling like your 86yearold mom. Where the shoe shine guy was back in the day. This is a teachable moment. Jeffrey gundlach i turned to bearish apple when it was 600 and change. And it went to 700. But then it went down below 400. The reason i got there. One of my mortgage traders was getting his haircut. His illegal immigrant drug addict hairdresser said she was going to buy apple and she felt bad she had sold it because it had gone up further. And he said arent you worried about the product cycle and all that . She said when the tv thing comes out it will be huge. Thats the type of thing you get when people are falling all over each other to beat other peoples price targets. I saw this week some Brokerage House increased markedly their price targets for amazon and alphabet from 1,000 to 1,350. Both. Thats what caught my eye. The target on both was ratcheted up from the same level. It seems weird they would be both be adjusted the same amount. I was bearish on apple because somebody said it was going to a thousand. It sounds like a round number. But then another guy to not outdone said 1111. I like that. But thats not analysis. Thats trying to grab a headline, get your name out there for shock value. Maria best move to short those stocks . You can never short momentum. You are right. But first you get taken out at a 50 loss. I turned bearish on the nasdaq in 1999 in the third quarter. It went up 80 in the next quarter. Maria Jeffrey Gundlach great to see you. Dont be a stranger, please. Jeffrey gundlach from double lions capital. Well be right back. Copd makes it hard to breathe. So to breathe better, i go with anoro. Go your own way copd tries to say, go this way. I say, ill go my own way with anoro. 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Unwavering selfconfidence. Stuck in a 4door sedan of sadness. Upgrade your commute. Ride with audible. Dial star star audible on your smartphone to start listening today. Maria time for a look at whats coming up in the week ahead. We kick it off with the economic data. Well get a snapshot of the economy when the feds beige bikes released wednesday. We are taking a look at the indicator on the health of the housing sector when we get the numbers for new home sales, Mortgage Applications and new home sales this week. Monday its netflix, tuesday, lots of big names. Ibm, morgan and stanley all reporting. A big one to watch general electric. The companys stock dominating market headlines after the departure of the come numbers cfo earlier than expected and the addition of chief Investment Officer ed garden to the board. The stock got killed on fears the company is going to cut its dividends. Ge, what a story there. Coming up, wall street week well talk with the ceo of or cal, mark hurd. 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