Equity Market is 'Melting-Upward,' CEO Cantor Fitzgerald
The government is crushing interest rates to push people to take risk, but instead the equity market is "melting-upward" because of all the uncertainty that the market players feel, Howard Lutnick, CEO of Cantor Fitzgerald, told CNBC.
“They [the government] reach around to their children, the banks, who drive the economy and grab them by the neck and say, 'you guys have to hold on to more and more money'," Lutnick said.
Take Goldman Sachs. The government is forcing the firm to become more and more of a bank. Historically they had such superb quality people down the food chain because they were able to take more risk, he said.
For this reason he thinks giant banks in general, like JP Morgan Chase, will began to play on a more even playing field.
And with no Bear Stearns and no Lehman Brothers in the picture, Cantor Fitzgerald has been able to "fill the void" and take care of the middle of the market, Lutnick said.
Lutnick is also the chairman and CEO of BGC Partners, which was spun off from Cantor in 2004.
“We are not a capital intensive company; we don’t take a lot of risk. We pay 75 percent of ever penny we earn to the shareholders. That is a huge yield—almost 9 percent," he said.
In addition, BGC is heavily invested in the electronic markets.
Along with 12 of the largest banks around with world, they are creating a new futures exchange to compete with the Chicago Mercantile Exchange—"which will create more volume for us and the CME," Lutnick concluded.