Moneybeat: Proposed economic policies

LINDSAY MAST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets and the economy with financial analyst and advisor David Bahnsen. David's head of the wealth management firm The Bahnsen Group. He is here now and good morning, David.

DAVID BAHNSEN: Well, good morning, Nick. Good to be with you.

EICHER: Well, at the risk of a little bit of old news, I did want to complete the loop on your economic analysis of the presidential debate. You said last week what you were hoping for, and now you know what we've got. So, how do you appraise it? And begin with the Vice President.

BAHNSEN: Well, there was virtually no economics in the entire debate. She was allowed to not really answer anything particular about her economic agenda. I was very disappointed in whatever we did hear about economics from both of the candidates. And then, most strikingly, as we've talked about, you know, through the whole campaign, and this was certainly the case in the debate, within the category of economics, there's no discussion at all about the national debt. And in fact, a lot of things that are thrown out there, even if they're disappointingly vague and ambiguous, they are even in their sort of prenatal phase, things that would add to the deficit, not subtract from it. And so there's just a real lack of economic self awareness in this entire campaign, and it's very disappointing.

EICHER: David, you said that both candidates were disappointing. Go deeper, would you, on the former president?

BAHNSEN: Well, he announced later in the week this idea to have no taxes on overtime wages. He didn't say it in the debate. He announced it a couple days later. And I fear that we're getting to a sort of cartoonish place now of the pandering and both candidates, you know, he announced no taxes on tips, and then Kamala Harris announced the same thing. And now they're just going through talking about these different things that I think are very politically driven, but really are not good policy. And even for a tax cutter like me, you really need the tax cuts to be broad based. When you give a tax cut to one selective group, what you do is incentivize really bad behavior of people manipulating the tax code. It has the risk of picking favorites, and I definitely understand politics, but I was very critical about President Biden's attempt to forgive student loans as what I consider to be a very crass way of buying votes. I can't really support it with selective tax cuts for overtime or for waiters or other things like this, either. So, we don't have a lot of economic coherence. The supply side movement, the success of the Reagan Revolution, was predicated on broad based reduction of tax burden that helps everybody, and then therefore produces incentive for greater productivity. And unfortunately, the things I'm hearing out of this campaign are not doing so, and I would apply that to tariffs as well, Nick.

EICHER: Well, David, since the last time we talked about it, we did get a new jobs report the month of August is in. Did not meet expectations, coming in below 150,000. What'd you think?

BAHNSEN: Yeah, I think all the data is still pretty consistent, that you have non recessionary data that speaks to slowing of economic circumstances. Manufacturing, industrial production, has not been great. You know, when you're talking about 125,000 jobs created, it's still positive, but it's below the 200-250,000 rate that you expect in more robust times. So, it is a pretty consistent theme of slowing data, but not bad data. And eventually slowing data does go negative, but we will see where we go into the next round of things around productivity. And then, as the Fed, you know, begins cutting rates, is there any economic activity that has been bottled up and is waiting to kind of get released? I suspect that there will be some, but we will wait and see.

EICHER: Alright, and it's been a little bit since we talked markets overall. So, maybe zoom out a bit on that. Any discernible themes that you can point to?

BAHNSEN: Well, the huge theme – and it's really played out now for a full two months, and so, I'm always hesitant to ever talk about a theme out of one week – but from, you know, the second week of July now through the second week of September, markets are up. They've had some volatility along the way, and no doubt in some cases, some pretty high volatility. And yet, in being up, it's been led by a wide margin by the more defensive sectors: utilities, consumer staples, healthcare, not technology. In fact, tech is like the fifth best performing sector through this. And four of the seven, Magnificent Seven names so called the biggest companies in the S&P 500, they're down in this period. So, I do believe that there's a rotation going on. And that's the big theme we're watching in the markets, is a rotation out of very overpriced growth investments to more value oriented.

EICHER: Alright. David Bahnsen, founder, managing partner and chief investment officer of The Bahnsen Group. You can check out David's latest book. It's titled, Full-Time: Work and the Meaning of Life. The website is fulltimebook.com. David, I hope you have a great week.

BAHNSEN: Thanks so much, Nick. Great to be with you.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.