tv Making Money With Charles Payne FOX Business October 3, 2022 2:00pm-3:00pm EDT
>> from cc to cp, take it away. charles: i certainly will thank you, cheryl good afternoon, i'm charles payne. this is "making money" and breaking right now, well the markets rebounding from its level since 2020 our stocks catching up to what bonds were discounseling on friday. garden variety, i'm going to ask my market all-star victoria fernandez if you are ready to buy. should we be at least nibbling right now? meanwhile, comparisons to 2007- 2008 continue with scuttleb ut all over the weekend that credit suisse was going
under, and best selling author robert kiosaki is going to join me on a possible chain of events and just two hours ago, a full throat defensive concerted economics so is this the new reaganonics, and then my takeaway on congress prohibiting stock trading probably a bullish signal for the market all that and so much more on "making money." all right, folks. can history repeat itself? investors are hoping seasonality remains in place, because that would mean that friday was the bottom for the year. see on average during the mid-term year, election year , rather market bottoms happen on september 30. in fact that was the exact low point in 1974 and 2002. today's actually began overnight , in fact but listen we've got a real big boost from
a big economic miss that came in at 50.9, by the way construction spending also came in below consensus. so we now begin this new quarter , right now, there's sort of a sigh of relief and not a moment too soon. 2022 has been really just the year from hell. last quarter, was the first quarter everywhere you had negative year where you had double-digit rally and i wanted to kind of explain this to you. double-digit rally more than 10% at the beginning of a quarter, the first time ever, that it actually finished lower. we've never seen anything like that, so how do we get through this? how do we power through what's really been a monumental year in the worst way possible? joining me now, one of our favorites gary kaltbaum, kaltbaum capital management. gary, let me just ask first of all about the rear view mirror for a moment because i want to understand it through your lens. what drove this? this is one of the most massive downshifts particularly the last couple of weeks of the
quarter. it was just straight down. >> i'd say one part federal express. the second part another spike in interest rates up to 4%, and you had some fed heads out in the last week or two saying even if we go into recession we're going to keep raising rates. that's kind of like a one, two, three punch that i think did the trick for another good leg down, and i think charles it's funny we have to say bad economic numbers gives the market a boost to the upside , but that is the case and maybe this is the start of something better. i thought there was a chance last wednesday we would get it and then thursday we gapped down , so fingers crossed we can do better, but just remember. we just dropped 3,779 dow points in 14 trading days, so to me i'll take every great day possible but for me, this is just a good bounce after a big
drop. i want tow so some follow through. charles: it really is hard to put this in perspective. when i talk to people about this they know their 401 (k) is annihilated but no one knows the depth of the destruction. one thing you had been talking about, you just mentioned the fed but you've been saying let's now focus because the fed itself is not what you want to focus on. we should be looking at markets and one thing i'm looking at is the bond market, because that seems to be dictating the pace, and this parabolic bounce that we had last week. it really is a big parabolic move the 10 year went over 4%. it feels to me like it could be climactic. your thoughts on that? >> if it is it's good for the market and i think everybody disagrees with me. they keep saying fed, fed, fed, and i keep saying market, market , market. the 10 year yield has been dictating big time policy to the market as yields go up markets come down, and now yields are coming down markets bouncing. how long that lasts i don't know correlations only last for a
certain period of time but right now, it's pretty much a one for one, and hopefully, we go down towards 3%. the other part of that equation, if rates keep coming down, that takes the pressure off the fed. it tells the fed that maybe the worst could be over. i'm just not so sure we're there yet. there's still really no leadership in the market except a couple of areas i've mentioned to you over the past few weeks and they have really done nothing but holdup and just fingers crossed we come out of this because man it's a pain in the rear. charles: holding up these days is heroic. i know you look at price more than sentiment. let me ask you about this , right? only 3% of the s&p, only 3% coming in today was above the 50 day moving average. what would you like to see? at what point does this become compelling for you? >> well, when you get down to that number, it tells you, you stretched extended to the downside and that's where you can get rallies also bearishness is really picked up, but for me it's all about price, and what i
have to see from an up-day liked to is the pullback controlled rotational, and then you get little confirmation you take another good day up. that usually turns the tide and yes, two days can do that. whether or not it's the end of the bear market, not sure if that occurs. we've had a few of them during this bear market and i suspect we probably got more work to do but you can get good counter- trend rallies like in the summer where i played it decently and made some coin, but besides that, most rallies have lasted a couple of weeks or less and again, not much to come out of it. charles: yeah, they have like the life span of a fruit fly these days. gary i do want to say thanks a lot. you've been instrumental in all of this. again this is the day, septembey , after september 30 where everything turns around fingers crossed gary thank you so much my friend. of course there's a lot of gaming the peak of inflation and the depth of recession right?
trying to figure them both out is tough. my next guest says actually it might be premature to even try either one. i want to bring in cross mark global investment chief market strategist victoria fernandez and i know you don't see recession until possibly next year. does that mean that we haven't reached peak inflation yet? >> well, not necessarily, charles. i think what it's telling us is that we don't really know what the path forward is going to look like exactly so we have all of this volatility going on. we know we have slowing growth. we know that inflation is moving a little bit higher with the last couple readings and i think we have to be concerned about what the opec meeting is going to be this week as well. i think that could push gasoline prices higher again. i just think there's a lot of unknowns out there but as you were talking about just a moment ago there's a lot of technicals telling us we're in a very over sold condition right now, so you still want to position your portfolio to be defensive, right you want to have some of maybe
those healthcare names, some staple names that are in there, but at the same time we do think because we're in an oversold condition, there's going to be a bounce that comes here, so maybe you add a little bit of beta, a little bit of cyclicality to your portfolio to take advantage of that, but i wouldn't say we've hit the bottom yet. charles: i'm going to come back and ask you about cyclicality in particular but first i just want to ask because everyone is saying earnings estimates haven't come down enough and i think you've been in that camp. for the s&p now, the streets looking for 2.9% growth for the third quarter. i will say at the beginning of the quarter it was 9.8%. this chart is so wide because energy is looking to be up 120% at one point. is that enough? does this number have to actually be a negative number to be sort of to feel more comfortable about the broad market? >> i think if it was negative, that be closer to that capitulation moment that a lot of people are waiting for. i mean, we know energy is holding things up a little bit. it's going to be when these earnings come out it's going to be about the margin pressure
that we see. we're going to hear people talking about the effect of the dollar, obviously, about supply chain, about all these issues, the labor market forces, and the wages being higher. all of this is going to feed in. i think we probably need to see things come down a little bit more because the market is still saying look, earnings are sufficient right now. margins are sufficient even though they are down from a high of around 13% margins are still looking at what, 10-10.5% for the quarter. that's going to support corporations which will support the labor market and we know the fed is looking for the labor market to weaken in order to stop raising rates so i think we do have a little bit further that we need to go on these estimates. charles: well it sounds to me like any bad news and the news might still, at least in your mind be too good, so the beta names higher beta names would that bring us back to some of the tech names, and if we bought these sort of names that make these big moves, should we look,
should people be looking to trade them? >> yeah, so you know that typically i like to talk about being a longer term investor and that's what we do for our clients but i do think because we're set for a bounce here in the market, this bear market bounce, you can add a little bit of beta and cyclicality. i wouldn't do it necessarily in those tech names. i still think maybe you have some downside for those tech names, but think of names like you know we love the credit card s think of an american express. there's a name with a good solid dividend. think of ups. you're looking at a dividend north of 3%. we're going into the fourth quarter where you have that strong seasonality. it's the holidays, and even though fedex gave you a lot of concerns, i think some of that was very idiosyncratic to fedex so with ups coming down a little bit, in connection with that, that's a name you could add to your portfolio. charles: full disclosure my subscribers are in ups. they got a big downgrade. someone went to like 105 from 145 but let me tell you something i kind of like those , right? i want wall street to get
negative. i really do. victoria? thank you so much. always appreciate it. coming up, folks, credit suisse not the only major one flashing warning signals. are the dominoes about to fall? i'll ask best selling author and fan favorite robert kiosaki at 2 :40 but first where do you go when traditional safe havens no longer safe? get out your pen, folks this is a critical chart school with one of the best, right after this. ♪ ♪
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here is when you need the charts right so everyone is being looking at apple starting to break down and you start to wonder where is the next line of defense on the downside? well first let's put in a little bit of context. i can't find a bear market where ultimately the best stocks don't get sold. charles: right. >> i think it's apple's turn here largely been immune throughout this bear. i think lower. there's long term support in the 105-110 range the 200-week moving average i think ultimately that's a rough ballpark of where apple goes here. charles: man, considering that, we're talking from 175 to 105 that be one hell of a driving. that be climactic. the bear markets over, starting to sift through the ashes. >> we have an index of really a decade of very passive participation. we call them lazy longs. there's a lot of lazy longs out there, i think apple is the best illustration of that. i like it lower from here. charles: let's talk about the bond market, the s&p 500 right around here. you could call anything, around
3,900 it's important for some people, the 200 day moving average is important to a lot of people. the bottom line seems to be a lot of hurdles before we can say the coast is clear. >> that's right charles. let's remember about the 200 day it's falling, it's declining so it's losing five, six points a day so each day that resistance line gets lower and lower. i think s&p and say 200 can meet somewhere in that 39 to 4,000 range. that to me is going to be very formidable resist an the remainder of the year. we got deeply over sold over the last week or two. we can bounce into that. charles: so i want to put this on a chart then talking about folks the 200 day, really, and this doesn't happen overnight. this is our like attrition. >> and this is what's important because how do bear markets end? bear markets end when the 200 day stops going down and starts to turn backup and i think there's time clearly before that's the case. charles: now we came into the day with less than 10% in the s&p 500 above their 200 day moving average. it's obviously a pretty good session so we're now about less
than 20%. you want this number to go higher before you could say the coast is clear. >> if you look at where this really peaked in let's say mid-july or early august. it was somewhere in that 40% threshold so i want to see a higher high in the percent of stocks above the 200 day something above 40% be the first signal that actually hey this market is starting to repair itself. when you look at the individual issues by sector, the sector with the most stocks above the 200 day is still energy. energy is still the strongest sector in our work technically. charles: would that be a place to hide out? >> absolutely and what's been under appreciated, even as oils been sold over the last couple months, the energy stocks have actually continued to outperform here. charles: it's interesting, because some people are saying they want to see that number go to the single-digit like 1-2%. the ultimate chart, the vix. katie stockton was here thursday and we went over this and again, we get to that 35 level. she's talking potentially 80-90. the bottom line is you also agree this has got to go higher before the coast is clear.
>> i would say historically, it be unusual if we got some end to this bear market without a very cap capitulating moment in volatility. so it's basically a moment of credit so higher vix would mean credit deterioration. charles: which is happening. >> its begun to happen the last couple weeks. charles: where would we go potentiallily historically north of 40, 50? >> i think north of 40. charles: okay. >> as a minimum standard for what you would see kind of at the culmination or some end to a bear market. charles: and real quick, we got 30 seconds. i can't leave without something to hold on to, right? merck acting pretty good, great. got a little bit of a triangle thing going but we're holding above that 200 day. >> in markets like this we need to be very mindful of where the leadership is coming from. it tends to be the leadership on the other side. pharma, murk is an example. you see it with some of the defense contractors as well, some of the financials and industrials too. charles: i love what you just said because we're going to come out of this and probably looking
for new leadership. chris thank you very very much. great stuff appreciate it. folks the gop coming off strong, new polling as the economy and safety front and center and that's what traditional democrat voters also in the media celebrating humiliating trust after uk scraps that big tax cut for the rich, david bahnsen is going to weigh in if this is really a war on reaganomics. ♪ ♪ what should the future deliver? (music) progress... (music) ...innovation... (music) ...discovery? or simply stability... ...security...
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monumental i want to bring in david bahnsen and david, you know, that kind of pullback in crude, listen. i mean, i think the overall pullback is probably what's precipitated this because i don't think a lot of people saw it coming down as much as it has including opec. how likely is it that they will go through with this? it be a historic cut. >> well, i think it's very likely, i think the saudis want to target about $90 oil which is really around that number that i think demand is not erode significantly. 110-120 demand erodes and so at a higher price you can make less money because you have less volume. 90-ish is less demand erose ever and yet much higher margins than 75 or 80 and that's the spot which the saudis want to get it to and boy it sure doesn't look to me like that meeting that president biden had accomplished with this administration wanted. charles: [laughter] no it didn't by the way i guess
that 90 be the sweet spot i couldn't resist. the plus one in opec, that makes us more of a political story because of the invasion of ukraine. it's interesting to me because we know russia's a pariah except we saw at the u.n. where the br icc nations didn't vote against any kind of sanctions or abstained, opec working hand in hand with russia. is there some other storyline going on here we should be aware of? >> i just want to remind people of basic economics that when you are a producer and consumer of a product, you only care what someone else is doing when they're the marginal producer. their last marginal contribution is going to be price setting. well, we could be the marginal producer. we've chosen not to be, so therefore, we've empowered opec plus to determine global price dynamics of a commodity central to our own economy, both as
producers and consumers. the story with russia's role is that they and saudi were at odds with one another in march of 2020 when covid was starting and they flooded the world with oil supply and pushed the price near the zero bound. now, they're working together because they both benefit for nefarious reasons from higher oil prices, all of this because we won't take control of our own destiny. charles: it's a very definition of insanity. i want to stick with politics for a moment. about two hours ago i watched the chancellor of the uk he gave a very impressive full-throated speech about conservative economic values talking about people keeping more of the money they earned. what do you make of the sort of the heat that this new uk government has been under? everyone has declared them dead and seems to have gone to war with them. i'm reading where it is really a defacto war against reaganomics.
i want to say two things about that. i saw the word reaganomics in the show notes and i love it because it most certainly was this time where we saw in practice economic theory working and pushing productivity and output up as marginal tax rates came down so as a policy we associate it with the reagan years it was true in the john kennedy years as well i might add, but philosophically, this is just about classical economics. adam smith, david ricardo, this is what we know. economics is about incentives when people get to keep more of something they produce more that generates it, and i really believe this attack over the last week was not political. it was philosophical. the far left fundamentally disagrees with the idea of people keeping more of what they earn. charles: wow. i tell you what it's something to watch. it really really is and again he gave an amazing speech. you are the perfect guest to have david, thank you so much, my friend. >> charles can i say one quick
thing? i was on your show thursday talking about this very subject and liz truss' people reached out for more comments and backup they take the supply side stuff seriously and watch fox business charles: i already liked her but now i love her. thanks a lot. see you soon. all right, folks so reaganomics under attack philosophically, politically whatever it is in the uk. we know in america bidenomics. first potentially deep recession , lilly gillum valetta is with me and there's a new gallup poll i saw this morning and there's been a surge in americans preference for republicans when it comes to prosperity. do you think people were sort of forego now the promise to more free stuff, the politics and start to focus on prosperity for themselves? >> i think after two years it's finally sinking in for americans that when your gas prices go up food goes up and you aren't
earning as much, wait a second what's wrong with this formula and it maybe policies that we continue to see aggravating this over and over again, so i believe strongly people will be voting with their wallets and november will be very telling for what will happen from now until 2024 for sure. charles: you know, one thing that i know the democrats have done a lot is try to separate the stock market from the economy and unless it's going really well but we have more people invested in this market than ever before. could there be a sense out there at least from your point of view that maybe people will understand that the war against the stock market is a war against main street and why not be an investor in the greatest country in the world? >> that's right and you know technology can be accessible to everybody. after covid, the up take of fintech that like the a corns and robinhoods of the world is up 73%, and millennials which now are a bigger population that boomers want to enter into the economy, want to participate in that and it's no longer this like complicated thing. i've got to call special brokers
somewhere. you can just do it on your phone and yes why not participate in this great nation, with all these companies that are american-born and making money even in the midst of a recession so i want to bet on growth. charles: you know what i love too is they are using things like reddit, the internet, the stuff i see people post on twitter some of the due diligence is so impressive. >> it is. charles: even more than wall street. the same gallup poll showed republicans pulling ahead in general. overall favorability and starting to really pull out by pretty good margin. is this about quality of life in this country? beyond prosperity and economics, but crime and things like that. >> yeah, well you know that we do big data analytics and our last read as of today for the last 30 days based on 6 million data points continues to put the economy and crime as the top issues for all americans. we look by ethnicity, different groups, equally that's what we want. live a good life, earn a good living, and yes, feel safe when
you're walking around and enjoying the neighborhood you live in so that will be the measure and what the current politics or policies will be evaluated as. charles: you know what's interesting because i lived in new york city in harlem in the 70s and even though people, it's bad now, it was a gazillion times worse then, there just weren't any camera phones to capture it but i saw the carnage why all of a sudden do you have these traditional democrat voting blocks who are saying hey , enough is enough. what's been the tipping point? >> i think and sadly, but the data shows it, there's no longer this black cloud that goes over being a republican equal supporting, you know, our former president trump which was somewhat controversial, but forget about personalities people are looking now at policies. charles: but even there are people who i'm always going to vote democrat even though i live in a crime-infested city and can't get a job and my kids are getting a bum education i'm going to keep voting democrat. you see what's happening with
latinos. >> exactly. charles: then you see the black voters. is there something just finally the time has come? >> i had never seen such a low favorability for president biden we saw 60% as of last week, negative and neutral, towards him, so i think it's the fact that we can now see what happens in states like florida, or now i live in texas, right, versus the new york. in the pandemic where everything was aggravated you could see that very big difference between kids that couldn't go to school while they were open and thriving in places like texas and florida. charles: we already had achievement gaps in these cities like new york and d.c. >> it's getting worse. charles: two or three years maybe four or five years, these are people wedded to welfare programs because they never have the education. >> that's exactly right. charles: thank you so much appreciate it. folks coming up two of my favorite guests on how we get through this rushed stock market, also we're going to be taking a look at the credit suisse contagion effect, and
charles: investors and financial experts a now drawing ominous parallels between our current financial situation, and that pre-financial crisis back in 2007. connell mcshane is live from our newsroom to breakdown this comparisons and our concerns. connell? connell: those are the days right charles? not hearing really predictions yet, but to your point we're seeing talk of parallels, right? going back to august of 2007 there was that french bank, bnp paribas, and it ran
into some funding problems and mortgage losses, and at the time , maybe it wasn't a huge deal. didn't seem like a huge development but now, people pointing backwards, they say that was the start of the financial crisis. a lot of people feel that way but now, see , liz truss now, i know you were talking about this a few minutes ago in the uk , with this plan for the tax cuts, the market has a negative reaction to the plans , so people started to draw parallels saying this is like 2007 maybe this is just the start of something bigger. it's a similar tremor, and now of course the news that the uk is backtracking on that plan so it's still a story unfolding. the other thing is the banks. back in 2007 and certainly 2008 there were weekends in which all of wall street seemed to be worried about the health of a bank, lehman brothers obviously the prime example and this weekend we had the reports there were phone calls going back and forth between clients and investors about credit suisse and you know it might be in some trouble and ceo's since came out and said we have plenty of capital, plenty of liquidity and things maybe calmed down in the stock side of it at least
still down i think almost 60% this year but it did turn higher after opening lower today credit suisse, bonds are another story but big picture if you look at the stock market i do want to end on some perspective. the market was down 54% over 17- month stretch back then if you just look at the s&p. for all our issues now, we have plenty of them, not exactly comparable. we went back 17 months from friday, down 14%, right so anxiety building yes, former treasury secretary larry somers has been in the headlines talking about tremors but we have a tremor doesn't necessarily mean there's some sort of huge earthquake charles but certainly people are anxious , and you get that feeling like you had back then. charles: the people were thinking also, is that we can't go back 17 maybe we're at the first nine, 10 months of that, and the next seven months could be, you know 2008-2009 so maybe dark clouds mean something. thank you so much, my friend. always appreciate those walks through history. and of course a lot of
speculation about credit suisse ready to go belly up at any moment, right? now by the way there have been several warning signs and then there was a dramatic decline in the company's shares that was a scenario in 2007 where people saying okay credit suisse you go back to 2008 when lehman went under and then of course there was a whole bunch of dominoes that fell. right now what are your dominoes so credit suisse probably be number one, deutsche bank number two, another big name to watch out for be barclays, i think a lot of people are worried about them. where do they fall? then they are saying you get u.s. banks, and then after that, you know, the most fearsome of them, i'm not in this comp some people say after that maybe you get the usa itself. want to bring in best selling author robert kiyosaki, and you have been warning about the ultimate consequences of u.s. malfeasance for years so are the roosters coming home to roost? are we at that particular point? >> well, charles, thanks for
the time, and i love your town hall format, because i got to hear from the people. i appreciate that. if you want my piece of sign from god, maybe, i think on september 13, 2008 was reverend ike, in houston, followed by lehman brothers two days later, and we've just now had not ike, yeah, we just had hurricane ian. are those signs from god? [laughter] charles: i hope not. especially if it was that but you know here the thing, right? >> [laughter] charles: you know -- >> it's my hero. charles: listen, prosperity preaching, no one did it better. especially when he sold the prayer clause but that's a different story don't get me started. >> [laughter] charles: they are talking about u.s. pensions because we saw last week the bank of england made a real emergency move and i've got to say this is something we all need to be concerned about. u.s. pension funds have been going into riskier bets because
they are trying to keep up. they made these obligations and a lot of people say this is one of the reasons they may implode. how do you see our pension situation? >> i would say it's very similar. i wrote the book "who stole my pension" with ted sadel. he is the biggest whistleblower on pensions, and he names names in our book "who stole my pension" and a lot of them are in biden's cabinet right now, interesting, [laughter] but i think the kind of the good news is the fed will have to pivot, which will save wall street. unfortunately, the fed saving wall street, destroys the poor middle class which is why i like your town hall format. charles: right. you of course are well-known gold bug. gold hasn't really performed as advertised right? we had this amazing inflationary environment. is this still the place to be? >> absolutely because when the fed, when they raised interest rates, the dollar became actually the reserve
currency of the world and all debt has to be paid in dollars, so the dollar got stronger, gold and silver get weaker, but as i'm predicting, it's about reverse when the u.s. follows great britain, pivots, drops interest rates, and inflation takes place, so i think we have about six months to get ready for that. charles: where does bitcoin fit into all of this? >> it's not so much bitcoin. it's blockchain, and you know, it's the ledger system that's digitalized, and the other thing that's happening is the chinese yuwan is already a c bdc is financing the belt and road project throughout asia and that means in a few years 70% of the world's population will be using the chinese cbdc bitcoin technology, so the u.s. dollar is under attack and we're in
serious trouble right now. charles: i've got 30 seconds let me squeeze this in because you're a big advocate for financial literacy. what should people be doing? what's the main thing people should be doing to bring themselves up to speed on what's happening? >> they should read your book, charles! charles: [laughter] >> look, i'm not blowing smoke, my friend. you've got to, what your book tells people is how to make money in booms and bust. if there's a skill you needed to , that's what you need, because booms are when you make money but you make more money in a crash. charles: yeah, yeah. that ain't a bad one either only 20 million copies sold robert thank you so much my friend i appreciate you. coming up folk, nancy pelosi blocked a plan to restrict congress from training. you know what that might actually be a good thing. i'll explain but first, how to weather the storm we just talked about and now we'll get into the nitty get it with shah gilani and erin gibbs,
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generally optimistic but more than anything, they pride themselves and their work on being realistic, and right now i've gotta say neither are thrilled about this market joining me main street asset management chief financial officer erin gibbs, along with money president chief investment strategist shah gilani. let me start with you, you're calling today's action a dead cat bounce. could it go any further before fizzling out? >> oh, it could certainly get 10%, we can go up 10% fairly easy maybe even 12%. this is the same scenario we saw off of the june lows, and we saw it again elsewhere, but we're going to continue to see this and market gets extreme ly oversold. there's a lot of cash on the sidelines, a lot of great companies starting to look very cheap, could get cheaper, and so guess what happens? you got a new quarter, let's go do some buying and see if this could last see if we can get some momentum into maybe an options expiration weekend, and then we get the short cover ing and you get all that so easily we could see a pop here
but it's going to be another dead cat bounce. the headwinds remain the fed is going to continue to raise rates and there's nothing that the market can do about that other than trying to digest that and hope for a pivot which isn't going to come. charles: you know, erin, did i hear right? did i read my notes right? you have some sort of hedge the three times bear? >> yeah. charles: the three times? >> now this is my personal investment. this is not for our investors. charles: so everyone understands , if the s&p goes down 10% you make 30%. >> right, and today, i basically lost 9% so far, right, because its gone up 3% so i've lost nine so today is not the day to -- charles: but it's a hedge though >> it's a hedge because basically i was tired of sitting in so much cash. i am willing to take on more risk and it's a hedge because the days where my other stocks and i strongly believe in long term it basically flattens them out and also let me tell you this is a short-term trade, when i put this trade in, i had a stop loss and a limit so that
whether it hits where i feel is the top or bottom it gets out automatically. it's not something that i have to monitor or i'm thinking long term holding. charles: sure it's a hedge. the unprecedented nature of what's happened here, just i'm showing some at the top of the show we never had a quarter like last quarter up more double-digits and down the way it did never in history the worst year since the 1930s, worst year ever for bonds and stocks. what is the message of this market? because i think this is the most underreported story in the entire country right now. the economic drubbing that we're under. yeah, i think this is, it's hard to talk about bonds and the importance of the bond market at certain points, because it's just a little more complicated and it's just sort of this underlying -- charles: but is it saying the economy is going to go down, the economies in worst shape than we believe? >> i think it is only because of the amount of debt out there, when we're talking about 1.5 trillion of debt coming on, we've already got 350 trillion
debt out there, all of these rates are going up, ink across world, right? not just the u.s. , and that means those prices are going down, and i don't see an end to those prices going down anytime soon ink across world and i think that causes a lot of other credit issues, and problems within economic recovery. charles: shah, i know you also pointed out of course nothing has been spared. stocks, bonds and now commodities so is there any place to be safe? is cash the only place really to be safe right now? >> well i think it's good time to be in cash. i'm very comfortable being in mostly cash, but it's also, i think, time to start to nibble, and i like intel down here. why? because you got a 5.6% dividend yield on a 30% payout ratio, and i will buy it lower so if it goes over i'm fine. i think the markets going to go lower so i'm not going to take a whole position here but for that yield, that $27 and change i'll start to buy intel. on the way down i'll buy more, if it goes lower i'll buy more
so probably take a quarter of a position now, quarter later, quarter later. if it goes up, fine, i've already got skin infrastructure the game. i'll do the same thing with rio tinto with a 12.5% dividend yield. charles: s'sshah, i've got 30 seconds and you said will keep going until something breaks and i've heard that term before, the audience heard it before, the housing market looks like it's breaking. would that be good enough? >> i don't know if it would just be good enough. probably there are other things but the credit markets in general but housing is a problem , part of the problem. the fed has this gigantic global problem that its created because as the fed raises rates, to combat inflation here every other central bank has to raise rates to support their country's currencies, so this is this race to the top in terms of how high can we raise rates, to stem inflation and everyone is chasing the dollar higher. something is going to break. the debt that is denominated in dollars has cost a lot more to
get paid off. there are zombie companies and u.s. markets and elsewhere that are going to go under. there's a lot of things that could break in the mortgage market we saw what happened in the uk. that was about saving pension funds. that's frightening. charles: yeah, i know it is. we've got to leave it there erin s shah, thank you both appreciate how candid you are in these tough markets and my takeaway is coming up as well congress you may have heard shelving plans to prohibit stock trading you probably weren't surprised but i'll tell you why it might be actually a bullish signal. be right back.
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- call the number on your screen. charles: all right, now you know congress once again shelving the notion to prohibit stock trading by sitting members and the old bait and switch. should not have been a surprise but no way nancy pelosi and company was going to shut down their open positions right now. they would be taking a huge loss. remember when the federal reserve and said let's do the honorable thing and close out positions and the question is how long will it take for congress and now it's for the market to rebound. according to jp morgan, the one year bounce from closing on a high earlier this year would be 37 almost 38%. annually and two years almost 18% a year for two years. 12% annually a year for three years. the list goes on and on.
so here's the good news, historically your 12-month bounce from a bear market from the first year is 43%. of course that means thatch to be in the right name because it's not the same names that led us to the downside as to the upside and most important thing is because nancy pelosi and company don't want to sell here. it probably means some point the market goes higher. when they do want to sell, maybe we'll head for deals; right, liz claman? liz: the most important thing is the final hour of trade. forget congress. charles, look at all the green on the screen. folks, kick off the final hour of trade on this first day of trading in october. we have a full stampede heading down rite now and point begin of 887 for the dow jones industrials and that's good for a 3% gain. looks impressive and the blue chips fueled by chevron, the oil major gushing higher in great point tuning fork to pop in crude oil an
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