Business Rundown: What The Trump Transition Is Signaling To The Business World
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I'm Taylor Riggs, and this is the Fox Business Rundown.

Friday, November 15th, 2024, as the second Trump administration takes shape, what is President-elect's transition signaling to Wall Street and America's small businesses?

It was a busy week in politics as President-elect Donald Trump's transition team announced many of the names he hopes will fill key roles on his team. Trump also said he'd be moving forward with launching the Department of Government Efficiency, it's called DOGE, and it will be led by Tesla CEO Elon Musk and former GOP presidential candidate Vivek Ramaswamy. They intend to cut government waste and make it work more effectively.

But also this week, we had CPI and PPI reports showing that inflation continues to tick up. This prompted Fed Chair Jerome Powell to say they will be cautious when it comes to future rate cuts. So how are investors reacting to all of this? And what does that tell us about what we can expect from the economy in the coming months?

Kenny Polcari is a market strategist at Slate Stone Wealth, and I'm pleased to say he joins me now. So it's interesting because we saw what happened yesterday and what's been happening in some of these names. They've come under pressure specifically because of fear over what he may or may not do, or is he going to bring everything to a screeching halt? Is he not? Uh,

And I think a lot of that is still unknown, right? So I think that's why you're seeing an initial reaction. I think, though, you have to wait, especially on some of these appointments that maybe the market or investors feel a little bit controversial. I think you have to wait until it actually, they get in there, you see if they get confirmed, and then you see kind of where the conversation's going. I think yesterday somebody came out and asked him, you know, live on radio, he's going to start getting rid of all kinds of vaccines. He said, absolutely not. That's not the role here.

Yeah, well said. He did say that. He's like, I'm not taking away anyone's vaccines. Everyone just take a step back. You know, but it sort of leads me to conversation. And what I love having you on is you're going to preview a guest that we have on the show, Kevin O'Leary. He's a big investor and entrepreneur in the snack space. Now, he's all in on healthy snacks, but I'm taking a look at Kraft Heinz, who's pulling Lunchables out of public schools because the sodium is through the roof.

Boycotts in my sort of mom circle, since I'm a new mom, of Kellogg's. Because the dye and the sugar and the cereal. And again, I know that you said sort of wait and see. But if we're looking at shares of Kraft Heinz or Kellogg's or some of the other big food makers...

Do we think that this is sort of a systemic shift? Do you rethink how we're thinking about profitability of snack companies? How should I be thinking about this? So I think I think it is going to be a shift because, look, perfect example is Kellogg's Cereals, right?

The Kellogg cereal in this country versus the Kellogg cereal that's sold in countries like Japan or even Canada are completely different. They got the same name, it's the same cereal, except it doesn't have nearly half of the dyes or half of the stuff in it, the junk in it that they sell in America.

that they wouldn't be able to sell in other countries. And so what I think is going to happen, the shift that I think is going to happen is that those cereals and those snacks are in fact going to get healthier, right? They're not going to have those dives in it. They're going to be held to a higher standard. So I think initially maybe you're going to see some weakness and there'll be a kind of a recalibration of what that means for earnings and for margins and for all that stuff. But look, it exists in other parts of the world. So it's not like it doesn't exist.

they do it kellogg sells the same product in other parts of the world that doesn't nearly have all the same stuff so i think it's going to be a matter of a matter of change right i actually would look at it as a positive change but i would be again i would just be cautious until we get through this initial reaction to any negative sentiment that might come out of that

Should I be cautious, too, when I look at shares of Eli Lilly, the impact this may or may not have on the weight loss drugs? Eli Lilly has been on a tear from the GLP-1s. Do I think that demand for that goes down if we do have someone that's really focused on health in the coming years?

Well, listen, I think someone that's focused on health and becoming is actually a good positive thing. I think that obesity and overweight is, I don't think it's just going to go away because suddenly you got RFK who's going to focus on healthier snacks or healthier food.

schools for kids and all that. I think it will certainly help, but I think that the GLP drugs will continue because they do more than, you know, just help people lose weight. They help people then deal with, they lose weight. So now they have less heart problems. They have less diabetes problems. They have other issues, other health issues that go away. So I don't necessarily think that you need to start saying, oh, I'm going to sell my lily because GLPs are going to go away. I don't think the GLPs are going to go away at all. I think they're going to become just another, uh,

another course of action that people, obese people can take to help them deal with weight issues and then deal with the other health issues that come across. So it may not, you know, I know that if you look at Lilly now, it's down off the summer highs based on kind of all this speculation around what's going to happen, what's going to happen. But obesity is not going away. Let's just say that. People are all of a sudden are not going to be skinny. All of a sudden they're not. And so therefore, I think there's just, I think it's going to be a renewed opportunity. You kind of have to wait and see how that plays out.

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You were so good at reminding us all to take a deep breath. I know in this sort of news cycle, every minute counts. And every time we're watching the tape on the ticker stocks, you know, we're all sort of with baited breath. I think you do such a good job of reminding us. Let's just all take a step back and sort of see how this plays out in the coming months.

On that note, I want to talk about Doug Burnham. A lot of people thought maybe he would be the Department of Energy, but we're hearing that he's going to be the Department of Interior. That still has a lot of heft when it comes to energy, permitting, regulation. How are you thinking about this appointment when it comes to some of the energy plays that you've been talking about with some stocks?

You know, Trump has made it very clear. He wants to kind of reduce the regulation. He wants to try to bring, you know, the United States back to the swing producer in the energy field, whether it's oil, whether it's natural gas, whatever it is, he wants to bring it back. I actually think Doug is going to support that

that mentality. So he is going to try to make it easier to get those permits. They're going to take away the red tape, right? Look, as much as Kamala Harris said, I'm not going to ban fracking, if they put enough regulation and red tape in the way, it becomes almost impossible just because there's so much red tape. She's going to say, well, we didn't ban it. No, you're right. You didn't ban it, but there's too much red tape to get through, so it gets frustrating, right? I think what you're going to see is

is you're gonna see a pullback and a drawback of that regulation, which will then actually make it easier for that industry to not only explore and produce and bring the United States to that swing producer role that Trump sees us. And actually, we were, under the last Trump administration, we were the swing producing country.

Well said. You know, Kenny, you've also said a lot of smart things that you've been poo-pooing and throwing some cold water on any thoughts that we, you know, are guaranteed to get a rate cut in December. Your buddy, Jay Powell at the Federal Reserve, hinted at the same yesterday. And that started of why you're seeing some weakness within the stock market today. He came out and he said, you know, given some of the inflation data that we got this week, we're not guaranteed to cut in December.

We got to give you a big round of applause, Kenny. You saw this coming. What are your thoughts?

I was surprised in September when they made that jumbo cut. I didn't see it. I didn't understand the reason as much as they said, and they tried to convince us it was fine. We were going to get potentially another jumbo cut before the end of the year. I was scratching my head saying, I just don't, I don't see it. On the one hand, the economy is strong. Every time you turn around, the reports are robust. The consumer has not failed yet. The labor market, I didn't think, was deteriorating nearly at the pace that they expected.

that they were worried about when they cut by 50 basis points. And look what happened yesterday. We continue to get strong economic data. There was strong retail sales, stronger than the expectation, which has been kind of the way it's been going. Retail sales have been always surprised to the upside. Continues to talk about the strong consumer. The labor market is not falling apart. And now you get a PPI

that has lifted its head, potentially signaling the return of inflation in addition to what the market is already assuming may happen with some of the policies that the GOP is gonna put in place. They were gonna be whether the GOP got in or the Democrats got in, they both sides were expected to reignite inflation.

And so I think that's exactly what we heard yesterday from Jay Powell. Suddenly he goes, whoa, whoa, whoa. We don't need to be in a rush. We can take our time. I think he needs to take his time because now he's realizing that neutral may be closer than they thought it was. And I want to-

breakdown. Four and a quarter, four and a half rates are not usurious by any stretch. Right. Yeah. You know, you mentioned PPI and I just want to break down for our audience. You know, we talk a lot about CPI, which is consumer price index, what we pay at home, the producer price index, which we got both readings this week. The PPI that you mentioned is what sort of the wholesale prices are. Right. And do you see that as sort of a leading indicator if

PPI prices are rising. That's what the producer is paying. In general, does that sort of filter down into a higher consumer price of what I pay down the road? Yes, it does. Because to your point, the PPI is at the producer level. What are they paying to produce? And if their cost is going up,

Then what you're going to see, and it takes about four to five weeks for those higher prices at the producer level to make their way in the system down to the consumer level. So I would not be surprised after the PPI report that we got, which was a little bit even hotter than what was expected to be a hot report.

that next month's CPI, because that's about four or five weeks away, that you're going to start to see the CPI number, you know, start to tick higher because that's the connection, right? So PPI costs go up first and then CPI costs go up. Let me respectfully push back on you just a little bit though, because when consumers say or hearing that inflation is going to rise again, we all have massive PTSD. I know I do. I looked at my grocery bill yesterday and I still am like, how is this still happening?

Trump has said, though, he wants to bring down prices. So is that through deregulation? Is that through cutting energy prices? Is that through AI and productivity and cutting spending from the Department of Government Efficiency, DOGE?

Is it possible to still not face higher prices and to start to see prices fall? I want prices where they were four years ago. Yeah, yeah. Listen, you and me both. I'd love to see prices. So there are going to be a couple of things going on here. Lower energy prices will absolutely help to –

stall inflation, right? Like maybe bring it to where we get no inflation, but yet prices remain elevated. See, that's the difference, right? While they say inflation is only 3%, they're rising at the rate of 3%, but the prices are up 30% from two years ago and three years ago. So they're already at this elevated position. So can I get back to 2019 prices, which is deflation without a recession? The only way you're going to get back there-

The only way we're going to get back there is if the Fed allows the country to go into a recession. Because if we go into a recession, then you're going to see prices actually fall. If they continue to manage and navigate this and we have a soft landing, then don't expect prices are going to fall, right? They're not going to fall dramatically. Now, if energy prices come down and transportation prices come down, yeah, you might see some pullback in prices, but you're not going to see 2019 prices unless we get

a full blown recession. It doesn't have to be, you know, a long drawn out two or three year recession, but we need to get a recession if we're going to really see prices come down. I hate to say it, but that's the only way you're going to see prices come down. You know, I never thought, Kenny, I would be looking at Argentina as a case study, but I am going to close my eyes and throw Argentina out there. They've been talking a lot about how the president there cut

government spending and inflation has fallen off a cliff. Is the Department of Government Efficiency led by Vivek Ramaswamy and Elon Musk

helping us cut massive spending. Can they do it realistically? Really do it? I think they can absolutely do it. Now, it hasn't happened yet, right? It's not going to happen until the new administration takes hold. But do I think they can do it? I think they can do it. Why? Because I think there's massive waste in government spending across a range of different industries. So I...

absolutely believe that Elon Musk and Vivek Ramaswamy can cut whatever the number is. They throw out $2 trillion. Okay, so let's say it's half that, a trillion dollars. Say they cut it a trillion, right? Which is a big number, but we're spending even beyond that, multiples of that number. So do I think they could? I think they could 100%.

And I actually think that's part of what the country voted for. I think the country is so frustrated and so disgusted with wasteful spending that they're going to succeed in that. Now, how much that helps?

I think it will, because remember, government spending also contributes to inflationary pressure, right? So less government spending and more money we save should take some of the pressure off. And Argentina is a perfect example. And through all of that, with our final minute, stay invested in stocks. What should I be doing right now?

So again, now that depends on who you are in the life cycle and where you are in the risk. So someone like you, absolutely you and your husband, because you're saving for 30 or 35 years out, uh,

You need to absolutely stay invested in stocks. You need to have, look, you need to have a balanced portfolio. You still need to have kind of the biggest names in the industries. I wouldn't go way out on the risk scale and start to put micro caps and tiny small caps in your portfolio. But I would certainly be building a balanced portfolio in some of the biggest names. And look, you're going to be a little bit heavier in tech because you're younger, you have more time. I'm 63. So while I'm in tech, I'm going to be probably less so.

just because I have less time, but I'm going to have a broadly diversified portfolio that includes the biggest names in the industries I want the exposure to. Well said. We still hope you're around longer with me for 35 years, right, Kenny? I hope so too. Come on. Thank you so much. Happy Friday. Happy weekend. You too. Bye-bye.

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