The Fed Should be Raising Rates Now – Icahn

In an interview to appear on FOX Business Network’s Cavuto: Coast to Coast on Tuesday, September 29 at 12PM/ET host Neil Cavuto speaks with Billionaire investor Carl Icahn about GOP Presidential candidate Donald Trump, interest rates and the economy. When asked whether Donald Trump is his candidate for president, Icahn said, “he definitely is” and that “I think he’s the best by far of any of these guys.” Icahn also spoke about whether the Federal Reserve should have raised interest rates saying, “I’d say definitely the Fed should be raising rates now, absolutely, to stop this proliferation of high yield debt and you’re right, they’ve painted themselves in a corner.” Icahn went on to say, that the Federal Reserve is “building bubbles as we speak.”

On whether he thinks rates should go up

“Well, I’d say definitely the Fed should be raising rates now, absolutely, to stop this proliferation of high yield debt and you’re right, they’ve painted themselves in a corner…Now, we never did anything close to it. You know what it is? It’s like taking some kind of drug that maybe works for a little while and now you just keep taking it, keep taking it and let’s see what happens.”

On whether he agrees that there really is no reason to raise rates because the global economy is so weak

“Well, I’ve given you a reason. The reason to raise rates is that you’re building bubbles as we speak.”

On whether there is another housing bubble

“I think there is, but you haven’t seen it yet…it could be disastrous. You have $2.2 trillion. You know, the subprime debt was only $1 trillion and look what it did. This time, you’ve got $2.2 trillion. It’s ridiculous. Buy — people buying things they don’t understand and how about emerging market debt? They — so until the IMF says good-bye, don’t raise rates, because you’re going to kill the emerging market debt, you know, structure. And you say well, we’re not supposed to be the banker of last resort for the whole world. Right, but that’s not even the issue. The issue is, you’ve got a real problem at home and I don’t think anybody is facing it. Janet Yellen goes, yes, I may do it, I don’t do it last night. She’s going to do it now. And now maybe it’s too late and then maybe — and look, a lot of people tell you, don’t raise rates because it will be disastrous for our economy, because we’ve painted ourselves in a corner. But, hey, I still think that — look, I — I think we’re dysfunctional in government and we’re dysfunctional in corporate America. You have no accountability in corporate America. And I think hey, I hope I’m wrong. Believe me, I’m better off financially if I’m am — if I am wrong. But I will tell you that we’re building, in my mind, a bubble. And I saw it, by the way, not that I’m looking to pat myself on the back, but I’m saying it to — you know, at least you know that I’ve been pretty successful over the years picking this stuff out. In ’07 I saw it happening and I did what I’m doing now. I’m shorting the high yield market somewhat. But I will tell you, I’m better off if I’m wrong. You know, I’m better off if it doesn’t happen. And maybe we’ll avert it. It’s like you see the tsunami coming or a tornado coming and maybe it will turn, you know?”

On whether Donald Trump is his candidate for President

“Oh, he is. I think he’s the best by far of any of these guys. He definitely is. I mean, hey, somebody could come along, a genius come along in business, maybe, you know, or maybe, you know, hey, I disagree with Trump on certain issues and I’m going to talk to him about it. But right now, he’s definitely my candidate…There’s nobody close. Because hey, you know, you hear one guy says oh, carried interest, they’re socialists. They have no idea what the hell is going on in business or in the world, you know? And all these guys that you listen to, I mean the closest guy, but I don’t think, you know, he can do it because I don’t think he’ll stand up to this Congress and Senate, the closest guy that understands stuff is Jeb Bush. But I don’t think he can do it. You know, I don’t think he’s got the — he’s brazen enough to go take these guys on. And you’ve got to really take on the establishment. You’ve got to take on Congress. You’ve got to take on business and you’ve got to change laws of business. And it’s hard to do. I mean, so Trump is willing to say screw you if he has to.”

On Donald Trump wanting to punish companies that hire abroad
“I don’t really think he’s saying that.”

On why he has dismissed the idea of Treasury Secretary

“Well, you know, I do what I do well. I know what I do well. I’m 80 — close to 80. I’m going to be running down to be secretary of Treasury. But I would advise — I would advise him. And they should get guys like me, if not me, you know, guys like me advising them instead of the groups they have. They — hey, they’re not bad people. Don’t get me wrong. But they should get people that have lived this thing, that have been involved in it. And — and they get these guys out of school and they all advise them. You talk to these politicians, you listen to those guys debate, they’ve got no goddarned idea, some of them, hey. So Donald Trump says to them, you know, we should get rid of carried interest, which is absolutely right. These guys, hey, you get a hedge fund operator, he’s making a fortune to begin with and it — he’s getting away with very long-term gain. So Donald says, that’s bullshit, we should show the world that’s not right. I think you’ve got guys up there saying well, you’ve got to — you’ve got to reward people for incentives. That’s true. That’s very true. But this is an issue, everybody talks about it, you’ve got candidates that say, hey, we have to reward you for incentives. That’s true. So if somebody buys a stock, they get rewarded for long-term gain, right?”

On whether there is anything he’s buying outright in this environment

“Yes. I mean there are things. I’m not on the phone, though, to talk about all that. I’ve always told you that I love Apple (AAPL). I think Apple is very undervalued. I mean, if you’re looking at the company. But I’m not here to push Apple. But I think Apple is going at nine times earnings. The S&P, I think they’re overstating earnings and no one is close to 20 times earnings. You know, they’re — they don’t advertise this intangible, all the — well, you know, they’re buying companies, they’re getting their tangible assets that should be depreciated over two or three years.”

On our debt

“Hey, look, can I tell you something? That is not the worst problem, in my mind. The overall debt is not the worst problem. What the problem is that Washington has no idea what’s really going on in business… But there are other things you could do. And what you could do is re-legislate inequality. That’s what we do. We have laws protecting mediocre CEOs. And what are the CEOs doing today? I mean with exception, they’re borrowing money at 0 percent, 2 percent, 1 percent. And they’re not taking the money and building that capital base. What they’re doing is buying other companies at higher prices so they can have quarter to quarter increases in earnings so their options make them a fortune. This is what’s going on and the Federal Reserve doesn’t understand this is what they’re manifesting and Washington doesn’t understand it. And you couldn’t change it by having certain — all you’ve got to do is — is make certain debt equity ratios applicable so you don’t have this crazy high yield proliferation, which I’m telling you is going to blow up. You want a grenade, that’s a grenade. You’ve got $2.2 trillion in high yield bonds that Mr. And Mrs. Jones hold today because — because the zero rates keep them from getting any kind of return on their money…And you know what? When that blows up, there is no one to buy them.”

On whether a government shutdown for any reason does more harm than good

“Yes, look, I personally don’t think there will be a shutdown. But that’s my opinion. But what really makes no sense, what’s really taking a great risk — and I allude to it in my presentation — is this refusing to pass legislation that everybody thinks you should to repatriate the funds over there that these companies have. And I’ll tell you that it’s ridiculous not to take $2 trillion back into this country. You know, no other country in the world gets double taxation. I mean these companies pay taxes abroad already. But more importantly — more importantly, what’s idiotic about it is it’s bringing a lot of risk that these guys don’t understand…But ask yourself, why should a company pay taxes over here when they can get domiciled in other countries and large shareholders, a lot of them aren’t what I’d call patriotic. I mean — and nor should they be. A company is a company. A company is not a patriot. And what they’re doing is just really opening Pandora’s Box by not letting them bring this money back and charging them a lesser tax on money they make over there, because most countries don’t charge them anything. Now, that is a real problem. That is really stupid. And that’s really dysfunctional.”

Fox Business Network

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