tv Making Money With Charles Payne FOX Business August 26, 2022 2:00pm-3:00pm EDT
neil: all right, jerome powell makes it clear he's got a handle on inflation and will aggressive ly fight it but that's exactly what seems to be worrying traders this battle goes on for quite sometime even if it's going to cause as the chairman himself said a lot of economic pain. here is charles payne. charles? charles: neil, thank you very much, my friend, and good afternoon, everyone. this is charles payne, and well, you just heard neil say it. jerome powell, he has spoken, and the stock market is reacting , and isn't reacting too kindly. as you can see we're down a lot. all the major indices coming in. here is the thing though. i'm not so sure this isn't just an act. i'm not so sure wall street believes jay powell. in fact i think they don't, despite this reaction. so i said on earlier in the week , jay powell will come in like john wayne instead he's
coming in like clint eastwood, guns blazing but with a real quiet manner. i have an amazing panel of folks to talk about this including sven hend rsvp ricks, and michelle girard and and where you should invest in the market where the experts say goes one way but really tries to go the other. all that and so much more on making money. all right, so, listen. i said he's going to, it was going to happen, it happened. what was really weird initially there was an immediate response, but at the end of the day, jay powell made a couple things clear. at least he did rhetorically there's going to be a whole lot of pain in that he is going to be a force of nature. take a listen. >> we're taking forceful and rapid steps to moderate demand, so that it comes into better alignment with supply and to keep inflation expectations anchored.
we will keep at it until we're confident the job is done. charles: well, edward lawrence is in jackson hole with a closer look at jay powell's comments and also what the other members are thinking because for a long time, felt like they've been leading the chairman, ed. reporter: you know exactly, and now it looks like the fed chairman sort of caught up and trying to get in front of this and we're talking about paying pain, not payne, and this is one of the most direct speeches i've heard the federal reserve chairman give since he's taken the post. he made a very clear, very concise message going forward of setting expectations. he hinted at future rate hikes would come with job losses and he also said an economic stress, because the fed must act aggressively to handle this inflation. listen to this. >> there will very likely be some softening of labor market conditions. while higher interest rates, slower growth and softer labor
market conditions will bring down inflation, they will also bring some pain to households and businesses. these are the unfortunate costs of reducing inflation. reporter: a pretty stark tone. now he mentioned paul volcker twice in his speech, even quoting him, saying that the fed must break the grip of inflationary expectations. now the fed chairman said another quote "usually large rate increase could be appropriate at the september meeting" he is not only targeting inflation now, but expectations in the future. >> the longer the current bout high inflation continues the greater the chance that expectations of higher inflation will become entrenched. reporter: and of all the federal reserve district presidents i've talked with i think what's happening here charles is the federal reserve seems to be raising their projections and trying to get that federal funds rate somewhere around 4% is kind of the grumbling i've been taking from this and historical ly, covering the
federal reserve, that 4% mark is where i've been told the federal reserve needs to have the federal funds rate to handle those ups and downs in the economy using just the federal funds rate so we might be seeing that aggressive move towards that, more towards the 4%. back to you. charles: all right, so he mentioned volcker twice, but he didn't mention greenspan once, although mention of helicopter ben, not this time. edward thanks a lot appreciate it. i'd like to bring in one of my favorite fed critics, sve nfl hendrick and you've been adimate the fed needs to be restrictive to fight inflation. did powell do that and step up the way you've been wanting to and let's say he goes through with this , what are the ramifications? >> hey, charles good to be with you. my initial reaction is finally, the lights went on. frankly, that's a speech that should have been given at the beginning of the year instead, we had this kind of communication blunder in july when the market took everything
to be doveish and doveish pivot coming again. look, the history is very clear. from the 70s, from the 80s. you can not get rid of inflation with a fed policy that is non- restrictive. it is still non-restrictive. you need to be aggressive, yes, that's the other keyword here, is pain. this is actually the first time i've heard a fed official, a fed chair, talk about needing to take some pain, which is the honest answer, is the correct answer. it is painful, and the key sentence here to me, from powell , was a restrictive monetary stance for sometime. none of us have seen any of this from the fed since before 2007, so this is a paradigm shift and i think everybody needs to be paying very close attention to this. anyone expecting that it's going to be a quick fed pivot is not going to happen.
higher for longer, that's the message and that comes with consequences. charles: sven, so listen, the street doesn't always believe him and i wouldn't be surprised if we get a little bit of relief rally on monday but that being said if he's going to be forceful, would the big test be the september rate hike and would it have to be 75 basis points? >> i don't think, frankly, charles and i maybe contrarian here i don't think it matters whether it's 50 or 75 basis points. it may matter in terms of trader s wanting to chase a perceived relief here that is not 75 basis points. the fact is monetary conditions are tightening. qt is going in full swing in september. you're looking at a shift here, and these increase in rate hikes , they are going to have a lag effect into the economy. in fact, what the fed funds rate at 2.33%, with er seeing a dramatic impact, for example, housing. the monthly supply of new houses
currently in the united states is 10.8 months. if you look back the last 50 years every time it gets past nine months we're heading into a recession so the notion that somehow, we're going to get back to 2% anytime soon, or that they are on a cutting rates any time soon is a fantasy, and so the impact on housing and other sectors of the economy will be with us into next year, and historically, historically, what happens, is markets don't bottom when inflation peaks. it bottoms when the fed is forced to cut rates as we are then in a recession, and the signs we're seeing right now of inflation rolling over is a sign of the economy slowing down , and with the cost of care gets higher there's nor slowdown , hence, the pain comment from powell. charles: right. you know, of course the housing might be that first big domino, many more to come to your point. it's interesting, because as i listen to jay powell and some of the other fed officials i think
back and you're old enough to remember when they would say disco was the worst thing about the 1970s. when you listen to the fed they say stop and go. those stop and go policies right so i'm listening to jay powell and it rings a bell in my head that maybe jay powell isn't trying to be paul volcker. mays his goal is just not to be arthur burns. what are your thoughts on that? >> well look, hears the problem and this was the example of the arthur burns policy to stop and go, is that if you do not tackle inflation decisively, you're just going to make it worse and my concern is, you know, the fed is always super- aggressive or has been trained everyone to be super- aggressive in easing as soon as there's any sign of trouble, in terms of in a potential crisis. they slipped through this inflation crisis that is hurting so many millions of people. they've been very slow here. they call themselves being aggressive but they aren't.
qt has hardly done anything this summer and supposedly final ly in september we'll see that liquidity coming out. so i hope that not too late to the party again, in terms of making another policy mistake. charles: sven, thank you very much, always appreciate these conversations with you. meanwhile, folks, also today, a wave of economic data out. i want to bring in nat west markets co-head of global economics michelle gerard. first i have to get your thoughts on jay powell. the market seems to respect what he said today. >> i think he was pretty clear. i think we're hearing a very unified message. i think the biggest takeaway is the fact that the funds rate is unlikely to be able to come down anytime soon and in a sense that the market we talked about is expecting, yes, we'll get rate hikes between now and the end of the year, maybe early 2023, but that's going to lead to a recession and the fed is going to be forced to cut interest rates in 2023, and i think what we've been hearing and again, in
kind of across-the-board is that rates are likely to have to stay higher for longer, and then even if there's economic pain, the fed is absolutely focused on bringing inflation down and they're not going to be able reverse course. they aren't going to want to make the mistakes they made in the past of reversing and cutting rates too quickly. charles: all right although that's easier said than done, right? because remember, powell, they hiked rates four times in 2018 even like a week before christmas. he was on the same sort of agenda he's describing now. something happened over the holidays that year, he comes in in 2019 makes these comments, these really doveish comments and he makes a complete pivot. you just got to wonder once the pain starts to stack up will they stay the course? on that note we saw the michigan sentiment reading. a huge improvement in expectations. what was really amazing for me is that they said lower household incomes were far more optimistic than higher income
households. is this just about gasoline being down, is there something else at work here? >> i think a lot of it is the gasoline story. it is interesting that it's an unusual circumstance, as you point out, that lower income households, their expectations, their optimism about the future were higher which is very unusual but it did correspond with a decline in inflation expectations, and i think that reflects the fact that gasoline prices, though still elevated, have moved sharply off their highs but back below $4 a gallon , and i think that that is just, that obviously is really helped those the lower income levels that really feel that pain, i think most acutely, and i have to say charles. i agree with you in terms of the fed chair. it's very easy to talk tough, but when the pain comes in, you know, when we are looking at an unemployment rate that is rising and weak jobs numbers, and inflation that has come down , but it's just not low
enough, will the fed have the stomach to continue to go to get the funds rate back down to 2% or keep the funds rate steady and that's what the market is betting on the fed will blink at some point in 202. this is a bigger question. it won't be answered today but that's the 2023 question or challenge for the fed. charles: before i let you go, another part that was intriguing and i thought about it with this michigan sentiment report and talking about expectations coming down. powell spent a lot of time today explaining the importance, right , of a consumer expectation s. i think he got some pushback on that for making maybe some people thought was a rash decision on that michigan report earlier in the year, but he used the term "breaking the grip of expectations." what does the fed have to do to break the grip of expectations? >> well, i mean again, what they can't afford to have happen is first of all, in terms of inflation expectations, to have higher inflation expectations actually come, you know, become
entrenched in the system. if consumers just don't believe inflation will come back down that higher inflation is here to stay, that will end up being a bit self-fulfilling in terms of making the feds job much more difficult but also, in terms of expectations for the economy, there is, there does have to be some slowdown in demand in order to bring inflation down, and at the moment, you know, we are still seeing decent resilience on the part of consumer spending we saw that in the numbers over the last couple months that consumer spending is held up, and to some extent, you are still seeing momentum and if we're really going to get inflation down there's a truth about, this is what he talked about, the pain that might have to be felt. we are going to have to see the concerns which have already happened, begin to impact consumer behavior and consumer demand, because ultimately that, as i said, is what is needed to bring inflation back down to a target.
charles: all right, boy, the plot thickens for sure. >> it does. charles: appreciate you. folks, of course we're going to stay on these markets, you too, as jay powell at least rhetorically has made it clear he's ready to give you all the pain you can take. they may say something different , we'll go to that redacted trump raid affidavit is out we have tom fitton from judicial watch to understand what it means at 2:25. ♪ your shipping manager left to “find themself.” leaving you lost. you need to hire.
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charles:, so stocks selling off right now big time, this after fed chair jerome powell signals that he's going to go at it. he's going to be tough, b tough, tough, with this economy whatever it takes to bring them in even if it means pushing it into a recession. i'll go to chart school with dot com stockcharts.com their chief market strategist dave kel ler, and there was an interesting chart i was looking at earlier today that shows the average s&p 500 performance around jackson hole, because one of the things that i find interesting is we always have these knee jerk reactions whether it's the decision day at
fomc, or jackson hole, that often reverse themselves. this chart suggests that yeah, while today maybe painful, it might get better from here. just your thoughts. >> yeah, so even not just jackson hole. i think when you look at the fed meetings in 2022 you've seen a similar pattern. the language we tend to get from powell and from the fed is usually reassuring. usually some optimism, a sense that they are on top of things and things are going to kind of be handled pretty well. today, got a bit of an opposite feel, right? we give more of a sense of a more aggressive tact and the fact that the markets have rallied despite some of those headwinds that i think powell is hinting at that are parts of our lives in the next six to 12 months so while the trends have been strong, we're also unfortunately entering into the seasonally weakest part of the year, which is going into september. charles: with that in mind, is there, let's go to the s&p. is there, because last time we
speak you seem to be pretty up beat, pretty bullish longer term mid-term, does big bounce, the june bounce, everyone is looking at this saying you know what? particularly the bears, or naysayers are saying that was just too early too much. do we go back and retest that 3,666 point? >> so, the key with looking at the market from a technical perspective is thinking about some of those key levels of support and resistance and the 200-day moving average is a commonly-used technique in the institutional community to get a general measure of trend. we are above or below the 200- day moving average a standard question on any chart. the s&p a lot of the major averages a lot of individual stocks rallied right up to the 200 day moving average, and about the last couple weeks, and all of them for the most part have pulled back off the 200 day moving average. now we're sort of caught in that no-mans land between the 200 day moving average a little bit above 4,300 and previous level of support is around 4,060-4,070 just below current levels.
as long as we hold that level you can consider a day liked to sort of an initial reaction to a more of a hawkish tone but further upside potential. we break 4,060 and that's where i would think a little more about downside protection, think about the probability of re testing those lows and i could see us going down to 3,800, 3,900 very easily. it's not too far below current levels if we break 4,060. charles: i've got 30 seconds to go. what's the most important chart then, the viewers should be viewing? is it the s&p or is it something else? >> its got to be the 10 year yield and i think for most of 2022, the leadership story, growth vs. value, has been all about interest rates. if rates go higher which it certainly sounds like they will, that's a big headwind for growth stocks and our growth-oriented benchmarks like the s&p and nasdaq will struggle to produce meaningful gains, if growth is hampered so i think the 10 year yield is really key to watch going forward. charles: absolutely. love it, david thank you very much good stuff. folks coming up, mark zuckerberg
admits that facebook censored the hunter biden laptop story but he's not taking the blame for it. listen to who he is blaming. >> depending on what side of the political spectrum you either think we didn't censor enough or censored way too much but we weren't sort of black and white about it as twitter. charles: we'll tell you also what else he ha to say. meanwhile, the department of justice releasing that redacted mar-a-lago raid affidavit, judicial watch president tom fit ton, has been pushing for his release, we'll see what he has to say now hat he has it in his hands. we'll talk after this. ♪ ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina?
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of the affidavit used to justify the fbi raid on former president trump's mar-a-lago home. my next guest has been pushing for this affidavit. in fact, its full release, just judicial watch president tom fitton joins me now. first of all, tom, are you happy with what we got? was it approximately what you anticipated? >> it's a little bit more than i think we were initially anticipating given the justice department's desperate position that none of it be released, but clearly, they wanted to release enough information and make trump look bad but in the end, and i'm glad for the transparencies as far as it went, it shows that it was a weak tea basis to raid president trump's home. there was a significant dispute about the nature of the document s, whether they were classified or declassified. the idea that the archives could come in and police the president 's holding of records after the presidency is
not supported by law, so in many ways, it shows that they didn't really have much, and they manufactured an argument that they didn't want to manufacture with anyone else whether it be president obama or hillary clinton or anyone or bill clinton as we found, to justify this raid on the home and it's a shame. i don't understand why the court approved it. the issues before him were in my view too significant to warrant a raid absent an adjudication of the president's claims he had perogatives as president to keep these records. charles: you know, from a layman 's point of view just speaking for myself as i heard them read off off the parts that weren't redacted it felt like a fishing expedition, like the all clear to go on a fishing expedition which i think in this climate, listen, constitutionally i don't think that's the right thing to do but more importantly in this climate where we keep hearing about the nation being fractured, it
just seemed like a real dangerous thing to do. >> yeah, i mean, the raid is unprecedented. i've noted that you probably have people in foreign capitals looking at the united states of america and seeing well, the one president raided the home of the other president. what is happening in america? is it failing, and this is banana republic-type of stuff and the raid and the documents confirm that, so you've got this weak tea analysis about the nature of these documents that are in dispute, and then on top of that, then they get a warrant that allows them to take documents way beyond the classified documents that were at issue, and what was the fbi doing, for instance, when they went and visited president trump's home in june? did they tell him he was under criminal investigation? did they read, did they tell lawyers this is a criminal investigation, and we're here to gather more information on you?
i doubt it. this is sketchy. charles: tom, cnn reporting that you have been providing legal advice to president trump, also that you actually were against the release of these, of the documents in the first place maybe playing a role in heighten ing this situation. what is your reply to that? >> well i'm not going to confirm or discuss or deny any conversations i had with anyone, certainly anyone like president trump but i've been public, charles, on this issue from the moment i learned that the archives went and harassed trump about these records, because we had sued the archives , taking the justice department's position that bill clinton had records he shouldn't have had. he had tapes, and they came back and told us that it's presumptive that if he has records after he leaves office they're his, they are personal and the court said the archives has no business adjudicating this one way or the other and there's no way to get behind the
president's decisions to keep records as personal versus presidential and that's what i've been public about, and you know, despite what cnn says, the fact is, president trump turned over these records. he said, okay, well if you think these are presidential records, you can have them. you think they're classified you can have them. you want to put a lock on the door we'll put a lock on the door, so he didn't follow my public position that these records are all his. in my view, still, he should go back and say, these are all my personal records. i want them back. charles: right. no, you know, maybe he will. hey i've got a few seconds and i want to squeeze in this mark zuckerberg thing with joe rogan, because it's a bombshell, it looks like, admitting that facebook did suppress the hunter biden laptop story. just for folks who don't know i'm going to share a snip-it of it of his conversation with joe rogan. >> the fbi, i think, basically came to us, some folks on our team and was like hey, just so
you know, like you should be on high alert. i think it was five or seven days when it was basically being determined whether it was false. the distribution on facebook was decreased, but people were still allowed to share it. >> did they specifically say you need to be on guard about that story? >> no. charles: tom, a quick reaction from you, please? >> well, he later said that when the laptop information came out, he put two and two together , and they suppressed that information. this is the same fbi that raided trump's home and just before the election, they're taking clear steps to suppress information that would hurt joe biden in his electoral chances, and we also know separately from the whistleblowers that internal ly they were obstructing the investigation. there needs to be a criminal investigation of what the fbi was up to just before the
election with not only the censor ship push, but its suppression of evidence for political purposes. charles: those drums are beating louder and louder so it might actually end up happening. thank you so much, tom, appreciate it. all right folks i want to bring in kings view wealth management ci ox scott martin and scott, what struck me is i was filling in for neil doing the 4:00 show on the news channel and it was big huge breaking news, big audience replies, but the market was rock ing. does the stock market not think this , does the stock market think this is a nothing burger? >> it does, a know burger, nothing hot dog, nothing meal. now that doesn't mean it isn't nothing. because as you talked about with tom there, this is pretty gigantic because of the fact that they went in and got some personal stuff of trump's obviously the personal records as you guys shown or talked about and discussed but it's also like as we've been shown over the years, gee, the hunter biden laptop, hillary's e-mails
and all the things going on with the fusion iq documents and things like that and the russia collaboration stuff that she conjured up. my goodness, man. if this isn't picking favorites, and choosing roads to go down on if you're the fbi and the justice department, just to persecute individual people i don't know what is so as a market situation probably not big of a deal but a big deal we should be taking under consideration for our country as a whole. charles: speaking of going down roads jay powell has, he woke up this morning, and he chose violence. [laughter] i mean, and you know, listen. i know he must be frustrated because the market keeps saying we don't believe you. some of it is false, this messaging, mismanaging his message but this is what we're seeing today. do you think this is an initial knee jerk reaction? what else might have to happen before the street takes powell seriously? >> drove down the road today, charles and actually, drove in reverse, you know? because like we had this thing, i think, all setup in a nice package, a nice box, and
incidentally, when he started speaking today, charles, the market rallied. we picked up about 20 points on the s&p like that and lost about a hundred 30 minutes later so i agree with you. i think this is a knee jerk reaction. there's tons of stuff that is getting blasted today. i mean, absolutely crushed, so we have started to pick-up some of those names especially in tech especially in consumer discretionary, because dude, i'm telling you. the market realizes that i think the fed is closer to done than there maybe leading on and if they're not closer to done they maybe leading on as powell said today then guess what? the data in the next couple months is going to tell them to slowdown the role on the rate hikes and we're going to be cutting rates next year, man, i'm telling you. cutting rates next year because there's maybe deflation. charles: i'm glad you put it out there. a lot of folks on the street playing their cards closer to the vest, you don't do that. real quick, are you buying in part because through earnings season and you are seeing names already that have already done
extraordinarily well and you know they are going to do well no matter what happens over the next year? >> yeah, great call, i'm talking about earnings season, man. we said this before and people liked it. they threw out the baby, the bathtub and the bath water and also burned the house down on a lot of these earnings reports. some were better than others but man all the bad data at least everything we know now that's within reason to consider is out there, so tell me what could get worse besides maybe no halloween candy and i'd buy these stocks right here which is a terrible situation. i don't want to scare the kids. charles: no you won't. folks we'll be right back. i'm greg, i'm 68 years old. i do motivational speaking in addition to the substitute teaching. i honestly feel that that's my calling-- to give back to younger people.
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me cio equities chief also, and steven, first of all, how surprised were you, with powell 's comments today and did the intentionality of him trying to see more forceful? >> we weren't surprised, charles. we had been on your show a few times and actually, on monday, we put out a piece, cutting equities again, first time we've been overweight equities now in our balanced portfolio in about 10 years, so we just thought this rally was way overdone. people got the wrong play book, the play book of the last 15 years has been the fed hikes, caused a crisis, they are trying to fight deflation, they hit it quickly in almost a v-shaped fashion and the world is saved, and this time around, the play book is the 70s. i like the fact that he mentioned volcker twice, that's telling me he's got that play book. that's what we have thought, and
that's a very different playbook it's not just that he's hiking, he'll probably do 75 and another 50 and get us to 4%, but it's more about the length of time you have to stay there, and that's what the markets are not anticipating. we think a lot of this rally is going to come unglued unfortunately. charles: so ben bernanke and janet yellen i think they were more to your point, concerned about the mistakes of the 1930s and how they may have exacerbat ed a recession into a great depression, but at some point, powell's going to have to face that same sort of test as well. i spoke earlier in the show about to me it feels like i don't know if he's being as much paul volcker as trying not to be arthur burns. when the push comes to shove, when the pain is out there, do you think he'll stay this course >> yeah, the positive way is to be paul volcker but he doesn't want to be arthur burns, but you know, charles, the economy is in
really much better shape. he's made that point a number of times. the financial system is much sounder than it was in the period where bernanke and yellen were doing their thing and so i think the risk of credit conditions unwinding in a way that would cause them to pivot is quite a ways off. i mean, right now, if you look at the inflation rate, historically, 2% inflation rates are associated usually with five unemployed workers looking for one available job. today, we've got six available jobs for every unemployed worker. i mean, we are just upside down here, and yeah, there's going to have to be some pain to get this economy back in balance and the financial system is very strong right now, and the need for some sort of crisis-type rate cuts is pretty limited.
charles: it's interesting, because powell used almost those same exact words in terms of the labor market being upside down so i'll let the audience know you're looking for 3,400 near term but you do see 5,000 somewhere down the road. i do want to bring up one thing because we're running out of time. you actually now publishing your third book, and it's not a market book. it's a book based on tours that you actual live gillian with the metropolitan museum of art, and of course, you've done it for years, and the title of the book is "pilgrimage to the museum." just quickly, tell us about it and why it's so much more important these days. >> well, a perfect anecdote to the market, a good weekend read i'd say. the problem with art today is people go to museums to look for beauty, and they come away a little bit board because all the descriptions are very sanitized. we try to leave god out of the equation but when you're willing to put them back in and think of art as an attempt to find beauty, to find god, if you will, you know a whole gripping
novel kind of opens up over the last 5,000 years and that's really what the pill grill age to the museum is. you'll never look at a piece of art the same way again after you read this book. charles: wow i can tell you i'm not sure i'll read it this weekend, stephen, but i will read it. my favorite museum is the frick , but i love that too. thank you so much appreciate it. >> thanks a lot. thank you. charles: coming up, we've talked a lot about jay powell, and these markets, but how do you actually maneuver in a market like this? well luckily we've got two of the best michelle schneider and victoria green are next. get down on it, get down on it ♪ . what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are?
first psoriasis, then psoriatic arthritis. even walking was tough. i had to do something. i started cosentyx®. cosentyx can help you move, look, and feel better... by treating the multiple symptoms of psoriatic arthritis. don't use if you're allergic to cosentyx. before starting...get checked for tuberculosis. an increased risk of infections some serious... and the lowered ability to fight them may occur. tell your doctor about an infection or symptoms... or if you've had a vaccine or plan to. tell your doctor if your crohn's disease symptoms... develop or worsen. serious allergic reactions may occur. watch me. charles: all right, so jay powell has thrown down the gauntlet the market is reacting so what should you be doing so let's ask our next guest, market gauge managing director michelle schneider along with g-squared wealth cio victoria green. thanks for joining us on this real difficult day. first i have to get your initial thoughts i'll start with you, michelle, on the reaction to powell and whether or not this is the big move starts a big move down from here.
>> well first of all, we have been talking about this for a long time, that powell was not going to pivot and it was some kind of false optimism, so for most of us, this is not really a big surprise. now, in terms of the technical analysis, so let's -- charles: although let me jump in one second, michelle. we got a little one and a half second delay i've been dealing with all show but even though he did talk tough, it still doesn't mean he won't pivot. >> well, that's maybe true, but i don't think so, and here is the reason why. in spite of everything that's going on today, with the sell-off, with the hawkish talk, with the dollar finding flight to safety even the long bonds going up as a flight-to- safety even with rates potentially going up what we're seeing is commodities particularly food commodities still rising. wheat, soybeans, dba, sugar, all of them are going up because the one thing that we can't
control here is these elevated food prices thanks to good old mother nature and the drought that she's reeked havoc all over the world right now so as far as i can see with the fed policy , i don't see him pivoting until we see some kind of aleve equation in these food areas that are having trouble. charles: good points, victoria? your thoughts? >> well i had to bring back market expectations, everybody said pivot after july and that wasn't right so he was very brief. it was like 1,300 words, eight minutes long. he said price stability nine times in there, and what we think is most important that we walked away from is the unusually-large rate hikes might still be necessary and this is something they don't want to be in a hike and drop, hike and drop. they mentioned volcker as you talked about in your last segment, charles so when we look at this i think 75 basis points again in september, you can't say unusually large and not back that up, so i think powell kind of called the shot there. i think the markets are re pricing because the most
dangerous thing to these markets is when the fedex peck stations and the fed reality do not lie, so i think he had to come out this hawkish and say we're not pivoting, we're going to hike, tighten and 4% as our terminal rate and possibly staying there longer so this was ripping off the band aid and convincing people they continue to be hawk ish and this is what we see as a classic bear market reversal and not a surprise at all. charles: even though it's a bear market reversal there are some things you like here, victoria. ibm, crowdstrike, and some of the energy names, devon, eog and diamond, that's the faang people want to be in these days, just quickly tell us why you like those. >> so energy i know the oil demand sometimes struggles during recession but we're in such a weird constrained world. we even see opec potentially pulling back on its supply with all of these disruptions this is a good place to be. remember, u.s. enp is breakeven especially in a permian, which d
evon is a crown jewel that we love, they bring on boltons, their breakeven is $30 to get it out of the ground so even at 85 wti, trading above that now they are putting out a 12-15% free cash flow yield and they are pushing all of that back to the shareholders. they aren't putting it back on the ground. they are fixed plus variable dividend and the share buybacks so these energy companies are a great place to be in because one , the breakevens are very low so even if wti putting back they are still going to make money and they are giving it to you. charles: let me bring in michelle, because i love that you also have some ideas to share with us on a day when most people are putting their hands in the sand. very eclectic so you got melco, a pure play, u.s. steel, msos, which is the index for wheat, but even more specifically, tilray. serious bottom fishing here, right? >> yeah, well the cannabis industry has a nice move this week and even though it's
selling off at the market the ceo of tilray has said basically what we've talked about which is the cannabis industry is just a huge explosion of money coming into the country, waiting to happen, and with also scarcity potential with water problems in california that can raise the price so we think that the market in cannabis has bottomed and msos announced a two times leverage etf, and that helped the market as well so it's just showing interest coming in right now. think of it as another commodity charles: all right and i would assume with melco, maybe china will get out of this , you know, this policy of shutting down every time one person gets covid good stuff, lot of ideas here, ladies thank you both very much. michelle and victoria, coming up folks my takeaway, a buzzword, a buzz phrase that powell used today and it just kind of reminds me about the overall war on your freedom. we'll be right back.
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today in our discussion about the federal reserve. jay powell, he mentioned rational and attention where people will pay less attention to inflation when it's low and more when it's high. the longer inflation lingers, the higher it goes and jay powell saying he wants to break that but means he has to break the economy. within this frame work is the notion of you having freedom; right. it's almost a farce to be quite frank with you. your prosperity, your hopes and dreams are always being manipulated and the same with the cash the federal government keeps pumping out. nap seizure disorders pelosi called it -- nancy pelosi called it the multiplier effect with the increase in payments. it wasn't to help poor people but get poor people to spend more and not save any. our free will is being manipulated by powerful forces s and it'll get worse and the dramatic decline of trust of major institutions and the battle against your freedom is
constant and will never go away. it's a huge challenge. how do we regain o all of our freedoms, especially freedom of thought and notions of the american dream being in tact and not wind up like a dog? it's a good question and be cognitive and remember it's not going to go away. i'm going to make room for lauren simonetti filling in for liz claman. you've got a big task ahead of you. this last hour of trading, buckle up. liz: to put it lightly, i know, charles. charles have, have a great peeked. you deserve it. charles: thank you. lauren: all three major averages down and down big. this is a darkening shade of red. we're at session lows as i