tv Fast Money Halftime Report CNBC October 10, 2022 12:00pm-1:00pm EDT
you see a lot more volatility, and you say the shake-up was just earlier >> yeah, it concerns me in a way. i mean, it kind of has come to represent risk more than hedging against inflation and things like that, and when that is holding up, you wonder what that means for the broader market with that, that does it for tech check. is that it for the rally that is the question after stocks rose, and now earnings and key data looming, and joining me for the hour today, let's check the markets as we always do. in the east, we're across the board, and focusing on the nasdaq, again, down 100 points,
and it's negative for october, and it's at a two-year low is that it for the rally if the nasdaq continues to be in trouble, that's it for the rally. >> in terms of technologies relative under performance to the s&p, it's nearly 7% right now. it has not been that wide in the last 20 years, so the significance of the technology decline can't be dismissed in terms of is the rally over, i think the problem now is you run out of time, you run out of time as you bump up the inflation report and you bump up retail sales and the earnings season, and it's going to be a difficult next three weeks, and if you have a capital need -- if you have a capital need in the next three to six months, there might be action you need to take in the market if you don't have a capital need in the next three to six months, you want to be able to take
advantage -- take advantage of the potential decline you are going to see >> my thought, as you are saying that, is the rally was always stunted by time. you knew you were going to get retail sales and cpi and earnings, and what was the rally about to begin with if you knew that was going to happen >> the rally was predicated on the possibility that you had a peak for the u.s. dollar we have not broken that correlation, scott that correlation is still there. where the u.s. dollar goes is where the equity market is going to go. unfortunately, you had a lift in the u.s. dollar this morning, i think for the first time in a while, the russian/ukraine conflict is affecting it, and you can't break away from the macro, right the macro is really dictating where the equity market is going to be priced in the interim.
>> i have microsoft, and alphabet's price target cut, and meta, which you own, price target is cut there as well, and again this notion that if the nasdaq is going to remain in trouble, then the other rally is done what is going to carry it here if you have worries about the economy? are you going to pile into cyclical stocks? >> the nasdaq and the s&p will definitely continue to have a headwind as long as the nasdaq is under pressure. i think it's important to remember, as of the beginning of this year, as of 12-31-2021, the ten-year return for the nasdaq was almost 20% per year, and now it's 13% per year, still for the last ten years, and markets don't go back to the averages and typically over shoot, so if the return has been around 11% for the nasdaq, i feel like there's more multiple
compression to go, and those were the stocks that earned in a zero rate environment, and you just have a different playbook today. i think the investors that are expecting this v-shape, and microsoft is going to bounce are going to be disappointed, because in a bear market it's time and patience, and the patience part of it is where most people make the mistake, and they say i can't stand this anymore. i don't think we are at that point but i do think we are getting there, and this week will be volatile with all of the different data points coming out. >> let's see if farmer jim's patience, as you say, have been tested i feel like i have not talked to farmer jim in a while. i am looking at jonathan's note today, and he says we don't think this market will have a v-shape rally off of the two-day mo moving average like in 2018, and
our sense is we break lower this week and heads toward the 3,400 level later this month farmer jim >> certainly my patience has been tested this whole year and continues to be tested, but it's not going to break jonathan has been right all year, and the technicals matter until the fundamentals override them, andwe will see what inflation does this week we will see what earnings start to come in there's no way for anybody like me to make a prediction the cpi will be softer than expectations, and for 18 of the last 19 months it has come in hotter than expectations, so i don't want to play that game and i will say this to your original question, these crashes are two days, three days at the most, and what is going on is there's a leadership change going on that is going to last going into the years going forward. you can look at it in terms of
relative phmultiples, and our friend notes you take two terms all of the multiple when you explode the top eight stocks, and you know what they are, apple, amazon and et cetera, and what you referred to as more cyclical, and i will call them value stocks, and we are not talking about the next two days or two weeks, and once we get past the next two months there's reason to expect those earnings to grow in 2023 at a rate higher than tech. so this transition from growth to value is painful, scott, because people come back in. when that the market rallies last week, they say how badly can i get hurt in apple or amazon you can get badly hurt the leadership changes, it's a transition and painful along the way. >> did i hear you suggest -- you didn't say these exact wurbdz, but i will assume that you did,
are you suggesting the fundamentals are better for the market than the technicals would suggest they are did you just say that basically? >> you know what, i am soft saying it -- excuse me as i clear my throat and nothing in that to be implied, and i am soft saying that, and i will say this about the fundamentals, though look at where the atlanta fed gdp market is, and look at the labor market and my point on this is not that i am ignorant of what the fed is going to do, it's that there's economic growth going on right now. yes, they will curtail that, and this is a strong economy that nobody wants to give credit to >> and jones was on the network this morning, and he thinks there's going to be a recession, right? but at some point the fed is going to -- after they put you there, they are going to reverse course and try and get you out
of it by cutting rates, and then at that point risk assets are going to rally, but that point doesn't seem like it's anywhere in the very near future, does it >> i would agree with that, scott. if i have looked at last week, we had a major bounce coming off a rough september on monday and tuesday, and got some softish numbers last week, and then we get a payroll number on friday that was stronger than expected, and to jimmy's point, you know, main street is stronger than we all think. unemployment rate is down to 3.5%, 50-year lows, and we are come into this week ppi and cpi, and the macro is the story of the market, and we talk about it every day, it seems like to your point earlier about what paul mentioned, i agree. i think it's going to take
sometime, just like accommodating policy takes 18 months to hit the system, and we are seeing small breaks here and there, and the labor market is still strong and we have to see breakdown there for them to continue to potentially pause, and i don't see that anytime in the near future. >> charlie evans said it takes 12 to 18 months for the rate hikes to have an impact, and it goes to the central question of what the fed is doing and why they are doing it and what they may continue to do that brings me to steve leaseman himself. he made the point that we still have supply chain issues, and there's too much demand given the supply chain issues so they have to hit demand to deal with the supply chain issues, and it goes back to controlling the supply chain issues, so what are we doing in the first place? >> what they can do, scott, and
that's the problem they do not control the supply levers of the economy, and hope the supply chain issues work themselves out, and charlie was optimistic on this and he said they saw improvement in the chip deficit problem that was out there that curtailed automobile production, and had seen some of the other issues start to resolve themselves and it was still too hard for the supply, and the fed is trying to bring the supply down and not cause inflation. >> so you had this conversation with him, worried about what happens if you break something along the way, and he's obviously mindful of that, as they all are, and he clearly doesn't see us at that inflexion point, i guess you could call it, at this moment, nothing
extraordinary was, i think, the word he used >> yeah, and i don't know -- they have obviously a lot of information there from the new york fed desk that moderates markets pretty closely, and we have access to some of that information as well by calling some of the people doing the trading, and we are hearing spotty issues of liquidity, at least in the united states, and i think we reported last week, talked to a bunch of guys, and they said if 10 was the worst you could have in the market, and they pegged it at a six, and there's a lot of uncertainty and communications from the federal reserve. it does not seem to them that it's a reason to stop hiking rates because they have to focus on inflation they also say they have these tools to deal with financial instability, which is what they call macro prudential inflation, which meanswagging their
fingers at the banks, and one of the appropriate criticisms here, scott, is the fed is watching the banking system and the market themselves and not necessarily the shadow banking system which they or i don't know anybody has that responsibility >> i think what the fed is watching, steve, is on many levels the most critical debate and conversation that we could have at the current time and i go back to the comment that was made last week, there's almost evidence inflation has peaked, and we had a conversation, you and me along the with panelists, which what is he looking at, and you said i am not sure what he's looking at to make that broad statement like that, which i posed him that very question on twitter. what exactly is saying that inflation -- there's almost no evidence he came back to me saying that
he's focused on underlying inflation, not the headline inflation. so my question then to you is, isn't there some evidence out there that underlying inflation has, in fact, or at least in some parts of that has peaked? >> yeah, scott, it's a tricky issue. i didn't know he responded to you. good job, and at heart you are a reporter even though you anchor the show, so hats off to you on that and here's the thing, and what the fed wants to do -- i only speak on that i think about the policy, and there's anecdotal evidence, and it has to show up in the numbers, and the core ecu rate continues to go up, and there's both the reality and the
data artifact of how those rents pour into the cpi number, and that's going to doom the cpi for inflation -- no lower rents for at least six months, so they have to play that game, even though, scott, as you say, things could be improving around them it's not enough if it's not showing up in the data, and i think, you know, there's a really good question, are we worried about inflation, and i was having this discussion with a big money manager this morning, are we only worried about inflation or the idea that the fed is going to make a mistake with inflation it depends on the day, but a lot of concern out there is not that we are going to have an inflation problem, because i think people believe that's going to come down, and the bigger worry is the fed is going to make a mistake, and for the reasons you are talking about, it's going to be too late or
looking at the wrong things? >> well, it takes 12 to 18 months for the hikes to have an impact on what they want to impact, right? and we have only been six months, and the first rate hike was in march >> but it's worth pointing out, scott, why he thinks we need to get to this place. he said 4 3/4 is where they want to get to. inflation adjusted funds rate of about 2%, and that's average for a fed tightening cycle, and he thinks there needs to be a positive rate and then a restrictive rate, and he wants two points total of a real rate and thinks that will bring down inflation. i guess they are going to tweak this thing as they go. let me tell you, scott, it has been a long time since i have seen this kind of unanimity in fed officials, where they are
making speeches and stuff and the difference between the dovish and the host hawkish member is slight right now, and they all seem to be headed to the 4.5% range >> and kashkari did not respond to my follow-up. he responded to the initial one, but not to the follow-up >> oh, not the follow-up okay, he did cool >> so there's still unfinished business between the two of us >> scott, i want to make sure we get a chance to talk european markets. but go ahead >> comparing the environment from now to 2018, i got the pause. >> yeah, i think that's an interesting comparison he made if we get off with a 2018 event
where the fed ends up tweaking in response to that, i think it would be cheap and if we get off with a mild recession i think that's cheap as well with the magnitude they have to accomplish i think that's worth thinking about. you hope the fed is watching the right stuff and the trouble with the things that happen with the liquidity issues happens because are where you were looking by definition >> i will throw something into the mix which i just have been alerted to by the news desk, and cnbc europe did an interview with jamie dimon today, or they may have been speaking over in europe, and he is talking about -- i am reading through this as we speak they are likely to put us in a recession, six to nine months from now, the head of jpmorgan
is saying, and then when asked about the market, he says it could be another easy 20%, and i think the next 20% would be much more painful in the first rates going up another hundred basis points, and i think negative rates when all is said and done will have been a complete failure. so we're going to try and get the sound cut and play it for you, andhe said europe is in a recession and they are likely to push the u.s. and world into one, speaking about the fed. we will try and get that cut but, joe, go for steve >> steve, there's a great line in a song that says, time, why do you punish me, right? i think the market in 2022 has
neglected to figure out that time is the solution to all of us, and the federal reserve's ability to speed up time, we had that conversation, and is that realistic from the standpoint of being able to pull forward and deliver the type of -- if you want to call it medicine or whatever it is they are administering to combat inflation, and they are saying after that saying either it works or doesn't work, and in either scenario we're going to have to stop >> boy, that's a really great question, joe. let me answer it as follows. time with the right policy is the solution if you don't have the right policy, time is your enemy i think the fed understands that the thinking at the fed, which i heard from folks like evans who talked about it this morning, the idea that you pull it forward and you use the market to tighten financial conditions
right now, the hope in this idea, the theory behind it is you don't have to do as much later, if you wait and have to further break the back of inflation, it requires tougher medicine than if you take that medicine up front. you want to be careful kind of imposing these metaphors on policy, and i want to say since '08 and '07, it has done what it can do to use markets to bring the hikes forward, and this is extraordinary. you remember powell did his pivot in november of 2021 and they didn't hike rates until march, and so that was several months ahead where it tried to really pull it forward, and we will see, we will have to get to a point where they are
comfortable, and they will have to wait, and whether or not pgs t that's too much, and jamie dimon, it's fascinating, and he probably is right in total, but certainly in this sense which is that where we are right now is not a crazy rate for this economy, 3.25 or 3.50, and it's the next hundred that is going where the central bank has not gone in a very long time before. >> which is why there's such a long lack of belief if they go to unprecedented territory they can manage it to where they can pull it off. steve, thank you we will take a quick -- go ahead. what do you have >> scott, really quick on the europe thing, and -- >> yes, yes. >> i know you wanted to talk about this >> yeah, thanks for bringing that up. >> they have blownout perhaps on
the bank of england saying doubling down on the idea you want to stop buying bonds, and they had a guilt 30, and a 22-point raise in the 10 german bonds are up as well. and our u.s. bond market is closed, but the futures market for the fed is open and we had a pretty good rise we are now looking at a 472 peak rate for the funds, and that's what is happening over in europe >> steve, thank you again. speaking of that interview that cnbc europe has done with jamie diamond, and we will take a break and we will talk ford and gm as well, and they are among the worst performers in the s&p 500 today. we will debate it. we're back in two minutes. think he's posting about all that ancient roman coinage?
no, he's seizing the moment with merrill. moving his money into his investment account in real time and that's... how you collect coins. your money never stops working for you with merrill, a bank of america company. personalized financial advice from ameriprise can do more than help you reach your goals. i can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about. (vo) hi. we're visible. a different kind of wireless company... ...running on a big impressive wireless network. how are we different? we exist only on your phone. so you get unlimited data for just $30/mo, taxes and fees included. plus we have a new plan with 5g ultra wideband. switch today at visible dot com.
pst. girl. you can do better. at least with your big-name wireless carrier. with xfinity mobile you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill over t-mobile, at&t, and verizon. wow. i can do better! yes you can! i can do better, too! see how easy it is to save hundreds a year on your wireless bill over t-mobile, verizon, and at&t. talk to our switch squad at your local xfinity store today.
jamie dimon over in europe with our cnbc reporter there. >> i mean, this again is fairly typical. markets go down, people forecast the economy and et cetera, and the ipo market closes first, and that has happened, and high yield closes second, and structured credit, that has happened for the most part and things start to get done, and you see a lack of liquidity in the markets, and a lot of intermediary because of the regulations, it is going to happen i think the likely place you will see, more of a crack and maybe more of a panic is in credit markets, and it could be eftsor a country where you don't suspect, and you make a list of all the prior crisis, we would not have predicted where they came from but we can predict it will happen, and if you need money, go raise it. >> what about stock markets?
where do you see the s&p 500 >> it may have a ways to go. it really depends, the soft landing and hard landing kind of thing, and i don't know the answer to that and it's hard to answer that, and it could be another 20%. the next 20% will be much more painful than the first, and rates going up were more painful than the first hundred, and people are not used to it, and negative rates when all said and done will have been a complete failure. >> that's jamie dimon moments ago. so let's kick this around. that was jamie dimon going down a checklist of trouble, what you typically see in scenarios like the one we are in, right you see stress here and then there and then you ultimately see it, you know, show up in a bigger decline in a stock market which he suggests could be an easy 20% more, and the quote
that stands out to me, if you need money, go raise it. that's what he said. what do you make of that >> well, i think what joe said on the front of the show, understand if you need money in the next three to six months, equities or long duration bonds are not where you want to be two things were interesting when he talks about the credit market, and i think if you see something break, it's going to manifest itself most likely in that type of credit market, whether it's an emerging market or something of that yoke, and so i still think that long duration treasuries, long duration corporates high yield are not the place you want to be right now, you still want to be short, because if something does break, equities will be the easiest thing to sell. i think jamie always comes out and says it like he sees it, but i do think between what you and steve were talking about and
jamie, we are in the unchartered waters and the fed is guessing, they are guessing their theory will work, and nobody has been in this environment where the fed is trying to slow inflation and not torpedo the economy, and i don't think that's going to happen i definitely think the probability of a recession gets more and more every day as the fed tries to reduce inflation, and i don't think they can the inflation we have, ood, housing and energy, they can do nothing on those three fronts especially as it relates to rents. >> he said a hurricane was coming and now he leaves you with the thought that maybe it's going to be a more significant category number associated with the storm that he suggeste months ago was coming. >> absolutely. i think for me, scott, i think the biggest concern, and i know joe mentioned it on the show
before, is if this policy doesn't work, right, so we're raising rates into a slowing economy, a gdp economy slowing as a whole, and this doesn't work that's the biggest concern i can see, of course, if that doesn't -- if it doesn't work there will be plenty of things that will break. for me it's all about how deep and how long will this potentially be i think the recession, not that it's inevitable, but we are on the two yard line at this stage. there are many concerns. go ahead >> your point is well taken. you say we are on the two yard line, and some like maybe jamie dimon himself would suggest that the ball tipped the goal line, and it's a matter of when and not if here's the second sound bite i referenced earlier about the idea of a recession. let's listen to that >> so i think you have to put
two things in mind here. currently, right now the u.s. economy is doing well. consumers have money, and fiscal stimulus, they have more than before, and they are spending 10% more, and their balance sheets are in great shape, and that has gone up a little bit but not nearly to pre-covid levels companies are in good shape, and credit is very good, and markets are still open, though rocky and stuff like that, but you can't talk about the economy -- >> we're going to try and recap that and play the rest of it we do have the rest of that, i am assuming. we will try and get that back to you, but we can, at least start kicking that around, joe, while we technically look at that. >> i go back to what we said on "on on overtime" a couple weeks ago, we will raise rates to a
high enough level to where we have to cut them logically that is inconsistent with trying to find a good solution i think it falls back to exactly what bryn identified, we have to have the monetary and fiscal policy to say, okay, let's tackle demand destruction, and let's normalize rates and come up with ways to -- there's a risk they are unable to properly and in a timely fashion affect inflation. you have to do it at a certain point, you have to stop because you can't place the economy, you can't break that economy it doesn't make sense to have both inflation and then people losing their jobs. it's not logical
>> jim, farmer jim, this idea, right, that this storm is coming and maybe it's time to look around and evacuate, so to speak, if you are able to, which dimon suggested, if you need money, go raise it those were his exact words >> i think there's a question hanging, and i am thinking about the 20% that he's talking about, that would reciprocate take your money out now. at least here in the u.s., i think this really matters. it seems likely there's going to be a european banking crisis, and we had a canary in the coal mine and who knows what will
happen with their bank i am glad you played the clips of jamie dimon, and what i didn't hear from him was any sort of concern about the banking system here in the u.s i think that matters a lot, scott. >> why does it have to go from zero to 1,000 miles per hour that's what happened in '08. why does it have to reach that magnitude to have 20% decline from here in the stock market? that doesn't make any sense to me it doesn't have to raeeach the d of the world again for the stock market to go down another 20%, and it's just a realization that inflation is inevitable at some point, and it's the steepness of a recession that dictates perhaps how much the stock market goes down
he went down the checklist he doesn't have to get to the banking system will get all messed up. >> allow me to disagree. this is something that we can absolutely disagree on, okay but when you get that terrible bear market that goes down 50% like in the great financial crisis, what is missing is the credit dries up, and solvency becomes a question at companies and individual levels, and what jamie dimon said is consumers and balance sheets are in great shape, and gave no hint of a credit crunch coming, and you can disagree, that's fine, but in true bear markets where you go down, credit dries up and it's not happening >> i mean, he's looking for the potential of a -- more of a crack, he says, and maybe a little bit more of a panic happening in credit markets, so he's not looking for -- >> maybe it happens.
>> he's not looking for -- >> but if it happens, that doesn't mean bank solvency is the next logical place to look so fast. it doesn't have to be that way >> what i am saying is that's a necessary ingredient for the next 20% down is some sort of banking issue here in the u.s. that you just have not had it could happen. it could happen. i am not saying it couldn't happen, but i am saying jamie dimon's comments gave no indication that's what is happening. >> my suggestion is if it gets to that point, it's going down more than 20%, jim >> you have my complete y agreement. >> we will have more on cnbc tomorrow with jamie dimon, and you want to listen to those comments again, and he makes comments to move markets like he may have done this afternoon, and stocks are at the lows of
the day. coming up, oil hitting a five-week high that's coming up plus, we will show you mystery chart up double digits, and we will reveal the name half-time is back after this ♪ ♪ opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪ ...writing new rules and redefining the game... ...and driving the world forward to a greener energy future. (applause) ♪ ♪
opportunity is setting a goal... ...and charting a course to get there. sometimes the only thing standing between you and opportunity... ...is someone who can make the connection. at ice, we connect people to opportunity. ♪ in any business, you ride the line between numbers and people. what's right for the business and what's best for everyone who depends on it. solving today's challenges
while creating future opportunities. it takes balance. cla - cpas, consultants, and wealth advisors. we'll get you there. think he's posting about all that ancient roman coinage? no, he's seizing the moment with merrill. moving his money into his investment account in real time and that's... how you collect coins. your money never stops working for you with merrill, a bank of america company.
welcome to the "halftime report." time to oil up and gas stocks. west texas crude going from 77 to 92 in two weeks joining me to discuss that is ceo of vanek good to see you as always. you are up 32%, and it's one of the big gainers in etfs, and the global sector is rattled by this in the energy sector right now, as well as variable demand and oil. what is your best guess where oil is going >> the last decade was tough, and we had near death experiences with oil and 2016 equities got crushed in the post shell hangover, and now we had
covid. i think we have got the opec plus, 80 bucks a barrel. i think we have more to go on the services side. >> let me ask you about natural gas. oil prices more than doubled, and natural gas is from $3 to $10, and the europeans are trying to get off russian gas in a matter of months even though there was a dependance of a matter of years. >> i think the oil markets will be great next year, and gas clearly has been majorly affected in europe, and so probably has a little down side, but, again, we see value in the equities even though that gas is globalized, and the world economy is going to be weak, right? we're at a very slowing global economy, and we still love the equities commodities have done great this
year, especially the energy complex, but we're liking the equities, still. >> we will have much more coming up on etf edge we will be joined by fiona, and we will be joined by fiona, and also kris hempstead. this thing, it's making me get an ice bath again. "half-time" returns right after this rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done.
i'm okay. ♪♪ age before beauty? why not both? visibly diminish wrinkled skin in just two days. new crepe corrector lotion only from gold bond. champion your skin. - [narrator] if your business kept on employees through the pandemic, only from gold bond. getrefunds.com can qualify you for a payroll tax refund of up to $26,000 per employee, even if you got ppp. and all it takes is eight minutes to find out. then we'll work with you to fill out your forms and submit the application. that easy. getrefunds.com has helped businesses like yours claim over $1 billion in payroll tax refunds. but it's only available for a limited time. go to getrefunds.com powered by innovation refunds. ♪ ♪ ♪ ♪
♪ ♪ just look around... this digital age we're living in, it's pretty unbelievable. problem is, not everyone's fully living in it. nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury. everyone should have it. and now a lot more people can. so let's go. the digital age is waiting.
the inflation and fed. >> consumers have money, and fiscal stimulus, they had more than before, and they are spending 10% more than last year, and 35% more than before covid, and therefore when we go into a recession they will be in better shape in than in 2008 and 2009 you can't talk about the economy and talking about the stuff in the future, and this is serious stuff, and this is inflation, which obviously is changing the affect with the numbers they told you about, and rates going up, and it's q kt, which we never have had before, and sovereign markets, and people selling you a treasury debt, and there's the war, and there are serious things likely to push the u.s. and the world -- europe
is already in a recession, and the u.s. going into a recession nine or so months from now >> if the u.s. goes into a recession, how long do you expect it to be? >> nobody ever knows, right, and businesses were amazingly resilient during covid, and i think governments did do a hell of a job to recover, and now you have to look at the range of outcomes it could go from very mild to quite hard, and a lot will bea lie on what happens in the war you will have volatile markets you have already seen markets down quite a bit, and high yield, and that's typical but it's still been ordi
>> i hate to second guess people, because i think it's easy for everybody to do, and in hindsight, they waited too long and did too little, but they are clearly catching up, and they are motivated to catch up and from here let's keep our fingers crossed that they managed to slow the economy that doesn't cause it -- it's mild. the far more serious thing is this war far more serious than the short-term affects of the economy and things like that >> okay. so that's jamie dimon there. let's bring in our headliner now, gregory, and good to have you now and bring you in especially now given what you have heard, i hope, mr. jamie dimon suggests, he called it serious stuff, and the war
affect could have a possible 20% additional drop in stocks, and his advice is to be prepared you heard him just say, and what he said earlier, quote, if you need money, raise it he talked about the credit markets were orderly, and what is your initial reaction to all that >> i think jamie chooses his words carefully, and rightfully so, and what he just said i have been saying for quite sometime, and i do not have the luxury of how many people listen to diamond. number one, he talked about a strong consumer, and that has been true. they have spent more than they did precovid, but at the same time that has been debt financed, scott. we had a record 229 million
credit line openings in the first quarter and then set another record of 233 million in the second quarter, and we were doing that while we were nearing all-time highs on average apr of 17 and change percent. so the summer of spend was largely debt largely debt financed. i think when we look back, we'll see the consumer balance sheet deteriorated fairly significantly in the third and fourth quarters, and i think we'll hear that from the companies come these earnings report. >> do you share his view, that you could get another 20% decline in stocks, easy if, you know, thing start to, you know, look a little square in certain places, as it relates to the economies? he's already talking about some of the issues around the world, as i mentioned earlier, that are having the impact, right the war, q.t., rates going up and likely to go up even further. do you share his view that, if
you need money, go raise it, quote, unquote >> i share his view, and i shared that view, you know, a year and a half ago when money was basically free you know, when i came out and set i think the fair value of the s&p was 3600 that was based on -- how low can it go? certainly lower based on sentiment. now i believe we'll -- but i'm going to start to look like 2023 very soon. we'll see what q.t. looks like, and if i don't want 215, 220 for 2023, yeah, i'm going to take it
lower, but sentiment as we've seen in dubai, it can drive things higher or lower than they should be. >> joy, what do you want to weigh in it's had an impact initially on how the market has traded. you won't make too brought of a statement, but the dow is now down 200 he's speaking plainly about issues he sees already many months ago, to maybe now being on the doorstep of more significant types of issues that we're going to have to come to grins with i think there is this rally cry. i appreciate everything that craig has said he's been incredibly accurate, but i think the rally cry, and i think the rally cry will ultimately come from the treasury market, is going to force the federal reserve's hand they are going to have to pause
we'retalking about a 30.5 trillion $cap. it's 23 $trillion. that treasury market has benefited since 2000 in one regard or another a central bank being the marginal buyer who is the marginal buyer for treasuries right now if you think about commercial banks, they're pulling back. foreign buyers are pulling back. the last four years, $81 brill onhas come out of the treasury market from foreign buyers because of the currency fluctuations, they can't step in or hedge, either so the public sector is not there. you're asking the public to be the buyer? when you talk about liquidity, that's the ultimate liquidity challenge. that's what edgar denny talk
about the bond vigilantes. that's why the federal reserve has to pause. >> you could take that, but somebody e-mails with a comment i want your reaction too as well that says, all we have done is retrace to the pre-covid highs what if the real selling hasn't even started >> that's really pertinent to what you were discussing with jim's is you can't have a retracement without the rest in the financial system, but if your 40% or 50% retrenchment was off valuations that didn't make sense to begin with? that's when you can have that without having to address the finance system you know, i love joe joe, here's my retort to that. i agree with you four or five weeks a about the incremental buyer in the treasury market
what we have seen in terms of the selling has been south korea, japan and others supporting their currency, but the domino effect of that, and, remember, that's driven somewhat by their policy decision to keep rates preterr nat rally low, and the private wealth, i'm going to go out and buy dollars that's the incremental buyers. that's why they need to join the rest of the world and raise rates and grit their teeth and bear through it. >> jim, i'll let you respond, too, if you want i think part of my point and greg's as well is you don't need an end of the world scenario or the worries about it for the stock market to go down another
20%. we're just in a period of normalization. the stock market went way up on a period of abnormalization, where money was free for presumably ever. most people haven't even seen a downturn of magnitude, who are now coming to grips with the fact we're normalizing policy, and thus valuations are normalizing, earnings may normalize, and stock prices may normalize. >> so, i think there's a lot of validity to what you and greg just said, but let me express how i'm showing that in my portfolio. i trimmed apple well below market weight last week. i'm at half the level of apple i sold nvidia 60 points ago, all right? i think there are valuations that still have to come down to normalize, to greg's point, but the problem is, when we look at the market overall, it's still inflated by tech, consumer discretionary, at least the teslas of the world,
communication services,at leas the googles of the world those excesses still have to come out outside of those sectors, i will tell you that markets have normalized for them to get materially worse outside of those sectors, i do believe -- i can't prove it, this is the future -- i do believe you have to have financial system distress to occur, but to the point about normalization. i'm 100% on board. by the way, just taking the ten-year to 4% or fed funds rate to 3, 3.25 right now, that's actually just getting back to historical norms these are not -- i think about the late '90s, the ten-year average, 5.5%, and average multiple on the market was 18. >> it's not the level. it's the speed of going from 0 to 4%. it's the speed -- >> i'll agree. >> it's the speed that that causes normalization for things that have been priced abnormally for this entire period. >> yes, yes, yes, scott.
i'm sorry to interrupt you, about you we're running out of time totally agree. we're closer to the end than the beginning. we're 100 basis points away. we're already 300 basis points in that direction. i totally agree. i'm just saying the next two months, you get through these, things could look better. >> greg, i'm going to let you go a quick last thought, and then some final trades from my peeps. but a quickie. >> so at the end of the day i just don't want to be ahead of it, and jim hinted at this yes, there might be a pivot 3, 4, 5 months from now, but we have q.t., earnings need to come down, a deteriorating consumer, and two more interest rate hikes probably this year when get a risk-free returned on a six-month bill of 4%, i think
you'll see a lot of money flows out of equities into high investment-grade credit, and into treasuries. well will talk to you soon, gregory, thank you, as always. let's do some final trades brynn, start of the off first. >> gm, it's down today on an analyst downgrade, you can sell the january 35 calls and collect $2.50, then around four months, it's a bit over an 8% yield while you wait for it to come back. >> jim, to you you own gm -- i don't have time to get into the downgrade or support, being what's your final? >> deere i think there's no question with the war going on, that that will be important for several years. >> jason >> i like autozone here,
commercial growth is here. >> and finally, joey. >> free pport mcmoran. i'll see you in overtime our mvp segment is back, a big call today on a drug stoke i'll see you then. "the exchange" is now. thank you, scott i am brian sullivan. here is what is ahead. the risk-off trade is alive and well the key inflation numbers, earnings, and yeah, the jamie dimon markets that are sending the markets low. one of your guests from the shine, turn total dividend payers, the safer name three stocks that he likes right now. plus the nasdaq once again lagging today. chips are being shelved. in case -- it may be yes, sir ahead.