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tv   Making Money With Charles Payne  FOX Business  November 3, 2022 2:00pm-3:00pm EDT

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golo's a lifestyle change and you make the change and it stays off. (soft music) neil: i leave you with the dow down 95 points if payne doesn't screw it up we'll see what happens here. to you, my friend. charles: the market was moving higher, neil. you and ken fisher, it was like socrates. neil: blame us, fine, fine. charles: forget the market.
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let's learn something. neil: all right, bud. charles: thanks, neil. i'm charles payne, this is "making money." yesterday wall street was hoping for a pivot. that is exactly what they got. instead of a dovish move they got something mean and green. jay powell 4.0. he is an angry beast, folks. everyone had to go back to the drawing board. we'll give you fresh insight, fresh strategy. what it means for you and the market and your portfolio. joe biden keeps bringing up democracy, 37 times last night in the speech but what about the economy? i will ask brian kilmeade and joe lavorgna. the leadership crisis at the center of all of our lows. they're here at 2:30. one of wall street's top tech analysts i will ask, is the party over? dan ives on staying the course. you don't want to miss my takeaway the sec going far enough not to deter business as usual on wall street. all that and so much more on
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"making money". ♪. charles: don't make minkery, you won't like me when imangry. jay powell became bruce banner yesterday, turned into the incredible hulk right before our eyes. it was clear the chairman of the federal reserve came into the press conference with a chip on his shoulder. his goals were clear, pushing back on the notion of a stepdown. he banished that "wall street journal" reporter who brought that. he was usually number one, he pushed him way deep into the queue. he was upset with forces from the fed that implored him to bring up the lag effect of tightening accumulation. blt scene with eddie murphy in trading places? like dow. it was a question 36 minutes into the q&a sent jay powell over the edge and further off script. >> looks like stock and bond markets are reacting postively to your announcement.
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is that something you wanted to see? is that a problem? >> charles: whoa, powell's frustration grew from there. mild-mannered federal reserve chairman morphed into indiscriminating green wrecking machine. the stock market got the message, loud and clear, folks, beating a hastety retreat. 2:30 close on a fed day. never, ever did we see it before, last one hour and 30 minutes was treacherous. we got up this morning, what is the market thinking here? we see the cme fed watch, interesting. we see 75%. 3/4 of a percent move here. another move here. what caught my eye, terminal rate 5.25 and 5 pine 5. that is huge. this will wrecks the economy according to wall street. the fed will have to cut and cut again. is that the new path? what this all means for the
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street looking for powell because they don't want him to go too far and then cut and then cut. i want to bring in bianco research president jim bianco. jim, lots of misdirection yesterday, dovish statement and tone turned quickly in hawkish stance and tone avoid of empathy, humor or compassion. your thoughts on what we witnessed? >> i think the dovish statement is a signal there is not unanimity within the fed there are some people like lael brainard the vice-chairman don't agree with this powell but chairman powell gets chairman powell's way and he made it very clear in the press conference, he views inflation as the number one scourge in the country and he might not be wrong on that. he views the best way to get inflation down is the reverse wealth effect. you can't have investors making tons of money like they did last year when the stock market was up 29%. that will spur demand and push up inflation even more. charles: jim, you put out a
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chart, it is all over with everyone is gravitating to this chart. you see the terminal rate about 5.1 but as i showed earlier you had the cme fed watch model at 5 1/2%. so what gives here? >> yeah. any that the chart you're looking at was a little bit dated and the cme has been actually moving up but what the chart is showing in, that is the new metric jay powell wants us to look at. not how much they will raise in december. almost doesn't matter if it is 50 or 75. the terminal rate is the fancy word we use where the fed will stop raising rates. we're off into the five handles, 5.10, 5.25, maybe as high as 5.50. interest rates were in the high 3% range, some short rates low 4% range for the ten year note. it has a lot more room to go higher this is going to keep the stock market on edge if we've got much higher interest rates in to you. charles: you mentioned it is
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pretty clear what powell is focused on, he made it clear over and over again yesterday but what about the notion about us, the investors out there? the idea that the fed doesn't care about us, he doesn't care about our feelings, doesn't care about our investment portfolios? people feel like rudderless ships out there because the fed was our friend for a very long time? >> yes the fed was not only your friend but it was also the creator of some higher markets. that is not the case anymore. so investors are going to have to understand that when they invest, they have to invest in stuff that can with stand higher interest rates. as we found with the overall level of the stock market it doesn't really like much higher interest rates. that is why it has been suffering all year. yeah, this will be a very challenging environment. it is not over yet. maybe 2023 it would be but we're not in 2023 yet. charles: let me ask you the markets are doing what the fed wants it to do. their works.
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what's the metric -- i think they tried to get it out of powell yesterday. he went into different areas. he talked about pace but he didn't really give us something to hold on to, something to root for, where do we see where the market, the worst-case scenario is built into the stock market? when can we start to guess that? >> you know that is a very good and that's kind of where we're all searching for where that answer is. in lieu of that what we need to see is weaker data, weaker inflation numbers which we haven't yet had. and so jay powell could come out and be very forceful when we're producing 2,880,000 jobs -- 288,000 jobs in september and 200,000 jobs in october if the estimates are correct. that might be very different case month into the future producing no jobs or losing jobs. charles: yeah. >> that is really what investor will have to focus on is the
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economy itself. that is the old saw we heard all year, right? bad news is good news. bad news unfortunately people losing their jobs might be what investors need to have. it is a terrible position to be putting us into but that is where we are. charles: certainly is. jill, thank you very much, always appreciate it. long-term investors have been comforted by the fact that over time the market always comes back. right now we're in a secular bull market. one of these really long bull markets. here are four secular bull markets. this one ended in 1929. we know the history there. this is where we are right now. you can kind of see we're dip dipping below trend this is the one that began in 2009 if this breaks down what happens next? i want to bring in victoria fernandez. victoria, you're a long-term investor. if the market breaks down from the long-term secular pattern?
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could we see multiyear lows? could we see lot of gains for individual stocks that have been wiped out happen for the entire market? >> you know, charles, we do expect to see continued volatility and we do expect to see the market to possibly go back to test the lows we saw earlier this year. our cio bob doll were talking yesterday. he is our conversation were limited. he is lifelong fillies fan and i'm a long-time astros fan. you never see a bottom when the fed funds is below the interest rate? we're 200 basis points away on that? i think there will be continued volatility. i think you will see the trend break down. it may stay in the same channel. we have the same words coming out out of the bang of england. we have two years of struggles ahead of us. i think we have struggles as well. the fed i think will go into early next year.
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take quite a long pause. charles: with that in mind, sharpness, velocity, the strength of that selloff, did those comments, market reaction cause you to change anything the way you're approaching this market? have you made any changeses? >> charles, we haven't, this is exactly what we thought powell was going to say. we were actually very surprised so many people were expecting some kind of a pivot. pivot has become the new transitory word this year. everyone thinks there would be a pivot. we never saw that coming. the fed told you they will continue to go to 4.75 and 5 on the terminal rate. you and jim were talking about that a moment ago. there is still a ways to go. powell is focused on inflation and we're not seeing that come down right now. unit labor costs up 6% year-over-year. so there is still a lot of things with no productivity gains or minimal productivity gains that tell us there are still struggles ahead.
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no change from us. that is what we expected. charles: when we came into the year there were a lot of strategies. people thought they were ready. they thought they had a moat around their portfolio. i was reading a story all weather portfolio, created by ray dalio, bridgewaterrer associates. 40% s&p, 40% bond market. you have gold in there, commodities in there. right now it is underperforming. s&p 500 is you know performing 38% since 2001. you held this portfolio. it has been pretty good and now it starts to fall apart. the question is, a lot of people are wondering is there anything such as a weather proof portfolio? >> we were all raised in the idea that you have well-diversified portfolio, 50-50, 60/40 whatever it may be. that has fallen apart as of late. this is the first time in 50 years the equity market and bond market decline for three
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quarters in a row. you have to be much more tactical what you're doing. there has been this rotation of sector recession you have people talk about. you have to be more conscious of what sectors you're in and what names. you know we always talk about do your homework and look at your names. i think that is what you have to do here. you can't just base it what we've seen in the past because it is just not working anymore. charles: it's a new day. victoria, thank you very much. >> thanks, charles. charles: by the way you may have forgotten we're still in earnings season. it has been hell for companies that have missed on top and bottom lines. i want you to take a look at this. if you missed on top and bottom lines this earnings season you're getting absolutely shellacked. i want to bring in slatestone wealth chief market stratfifth kenny polcari. there is a line in "glengarry glen ross," i know you remember it. they asked me for a favor. i said the real favor, follow my advice fire you because is a
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loser. roku, you hated roku. when pelaton reported you hated pelaton. >> right. charles: here is the thing people thought down 50% it is too late. down 60% it is too late. is there ever a time when it is too late not to get out of broken names? >> only time it is not too late it gets more and more painful, right? at some point they go lower, lower, at some point they are a buy. you had it. disgusteds wanted them out. you should have got own out a long time ago when they started to break down. if you hadn't, holding on to them down you have to rethink it to decide if you missed the whole move. maybe you want it to sit there. maybe one day you let them recover. in my mind you should throw them out, focus on the stuff that is going to work as we move through the next 12 months. charles: that is where i think this is probably the second biggest mistake people make. the first i think is buying a stock that has like a nine dollar stock because it is nine dollars and cheap, right?
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>> right. charles: let me get your take on powell yesterday because from a different angle some are actually reading this in the sense that if you listened to his words he is willing to be the fall guy, to actually deflect economic blame from the administration. did you feel, did you sense that at all yesterday? >> you know, a little bit because he was specifically asked a question about the fiscal spending. he was very, you know, the way he dodged it. it does feel like he wants to take more of a responsibility. the truth is investors know it's a combination of both. it is not just the fiscal. not just the fed. we could say both sides kind of overdid it for sure. i mean for sure we know the fed over did it. i was always a jay powell fan. of late i thought they completely missed the boat. you and i had this discussion. while he may want to take some of the heat away i think some of that is political, right? we have the elections in five days. he doesn't want to shove it right down their throat five days before. i think he tried to take most of
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the plame but i think investors are smarter than that. charles: did you do anything different because of what happened yesterday? >> no, i didn't. the only thing i did different. it wasn't different, the same i said to you. amazon and apple con to be weaker and i continue to add to those. those are names i think it is way overdone. they are just names in my portfolio. i like them. they're cheaper. they're on sale. i don't think roku and amazon are the same company. pelaton, amazon are no the same company. i'm okay with it, right? i've not been a seller. i've been a net buyer on balance. so even as we move into this downturn i would continue to be a net buyer albeit i'm a little bit more cautious because i do expect more volatility ahead but i still am a net buyer on balance. charles: we start, we get the jobs number. after that cpi. say whatever it is, they come in worse than expected, right?
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i mean that is what everyone is looking for? yeah. charles: everyone is rooting for really bad news. do you think for just right now even if you get the high spurts, big moves to the upside just for now they're for the most part, most people trading buys? >> yeah i think they are trading buys because i think what will happen, i'm not so worried about tomorrow's norm, non-farm payroll number and cpi, ppi, next week and toward the end of the month. i think that shows an upward bias. that will reiterate what jay powell said yesterday. terminal rate is higher. victoria said it. i put it in my note. i think it is 5.25. if we get an uptick in cpi which i think we'll only get, it will only embolden for paul to stay on the course 75 basis-point hike in december is very much a reality. i think the market will again struggle once again. charles: kenny thanks very much. i love it. clear and concise. i think we get it. if we don't get it by now we're
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in trouble. see you soon. >> a pleasure. charles: so many ideas, so many trends, i love to discuss i never have enough time. so i write every single day. i have my market commentary. go to check it out every morning. i know you will love it. meantime small cap names continue to stand out. are they, is this place to be? we'll look into this deeper. we'll go to chart school so get out a pen and paper. we'll be right back. ♪
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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: really a big theme in this market the last few weeks is a changing of the guard. megacap names, they are not just moving lower but getting hammered. there are a whole lot of other niches but perhaps the biggest beneficiary may be small caps so far. welcome to chart school. joining me tech charts managing director, axle gabar. i have your chart here with the russell 2000, nasdaq 100. essentially the small caps against the biggest of the megacaps and i know you talked
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in your report, your writing rather, a reverse head and shoulders is always a bullish sign. where do we have to go to clearly be taking off and the kind of rotation that can make us a lot of money? >> yes, charles, the chart has become a little bit more steep after completing that one year long head and shoulder bottom. a similar part pattern formed in 2000, turn, similar head and shoulder took place with reversal as well. in term of ratio we apply charting principles the same way we apply to absolute price charts. charles: right. >> doesn't matter if you're looking at the ratio or an absolute price chart and the bigger theme here is that 2020, 2022 range can actually become a major double-bottom if this range succeeds on the upside. charles: let me show the audience what you're talking about here because i love what you're talking about.
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to bo back to 2000, shoulder, head, shoulder, head, bam, takeoff. the other thing if you use this chart itself, i'm sorry, we're right around here. so a bottom here, a bottom here, again another simplistic chart formation but probably one of the most effective, the double-bottom. i want to move on because you got a couple other things you're looking at i want to share with the audience including crude oil. this has been the trade. every one loves it but crude oil itself is sort of still, it is in a downtrend but we do have the same reverse head and shoulders formation. do you think this will break out soon? what do we need to see? >> well the interesting thing about this chart as i look for inflection points. what do i mean by inflection points? inflection points are those where chart pattern boundaries overlap with long-term averages. in this case we have the 200 day moving average, freshening the price on the upside, 93, 94-dollar area and we have the neckline and also the horizontal
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support at the same area. so it is clear that 93, 94 area we're talking about a price target of 109. charles: right. >> that clearly will put more pressure, inflationary pressures on markets. charles: here we go folks all the things converge right there, if this takes off, not a lot technically in the way to stop that. i've got a minute to go. the dollar, golly, the dollar has been so strong. it hurts multinationals here. it hurts small emerging nations around the world. i'm really surprised we have not intervened but the dollar was pulling back. it is in a big move here. does it look like it will test early 2000s high? >> i think so. so far the price action has characteristics of a clear uptrend, strong uptrend. we're seeing more and more short-term bullish chart patterns completing on the upside and strengthening the uptrend. and so far we're seeing that
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bullish flag, if breakout 113 level on dollar index, easily target 117, 120 resistance area. charles: boy. >> bear in mind this part of the move has become pair roll i can. we're likely to find resistance close around 117, 120 area. charles: okay. that would take us back up here, parabolic, folks another words for just straight up. thanks so much. appreciate it. >> thanks, charles. charles: did you see president biden yesterday? he used the word democracy twice, nearly twice as long as his 20 minute speech. everyone is talking about the economy right now especially as we're negotiating, hopefully we can get a soft landing. it is all about leadership. so we have brian kilmeade who is a best-selling author among other things, joe lavorgna many consider the best economist on wall street. my take later in the show, sec letting people off as usual with small slaps on the wrist.
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♪. charles: so it's come down to this, folks, we're rooting for bad news and we got some in the ism service number in october released earlier this morning came in at 54.4. the street was looking for a higher number. here is what you need to know, that is the lowest number since may 2020. comments i love reading comments from the respondents. one professional services guy says we're preparing for recession. this is intriguing. retail respondent said labor is more available than it was last year. remember we were supposed to have a tight labor force. the report was much-needed. the notion of inflation has really done a number on this economy. now everyone is bracing for what
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jay powell may do to the economy. of course we are showing cracks in the armor. that is not enough. jay powell wants to see this thing down considerably. ironically he may not think the economy is suffering but voters do. without a doubt number one issue boeing into the midterms. this bring as mind from "cool hand luke." what we may have here folks, a failure to communicate. former white house chief economist joe lavorgna, brian kilmeade. not an economist, but the host of "one nation," author of another best-seller, "the president and the freedom fighter." just time for thanksgiving. out of paper back. we're lucky to be celebrating it. >> absolutely. charles: the reason why you guys work well together this all to me boils down to leadership, a lack of leadership and a lack of confidence in leadership. i will start with you since jay powell is the man of the week, man of the moment and has
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been the man of the year honestly. he came out swinging yesterday. what was that all about? >> i want to add, charles, a lack of faith in institutions. >> another great point. >> the problem i have with transparency and jay powell doing his best to communicate the fed is responsible for things it cannot predict, meaning the economy nor control economic outcomes and therefore i don't like what the chair said yesterday. the fed needs to take a more holistic approach. they have done done a lot of tightening i would like to see how it plays off in the system. the balance sheet rolling off aggressively and i worry about the recession. charles: i don't like what president biden said yesterday. it was only a 20 minute speech. one of things i didn't like he didn't bring up the economy. maybe that is a good thing, brian. what about the idea if you don't vote for what he wants you to vote for democracy -- >> that is unbelievable. if you look at any top five issue, goes right up to fbn, 54%
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of people say the number one issue, if you take inflation and the economy is the economy. if you take both these things because the inflation is the economy. that is what people are most concerned about. instead we're talking about january 6. talking about what happened with paul pelosi. that is fine feel terrible what happened. i feel terrible for 35-year-old woman beat the crap out much here in a train station. 26 people thrown on the subway tracks. feel bad for the woman executed when her ex-husband killed her in broad daylight after pledging to do just that. you don't even acknowledge the crime. you acknowledge the high-profile incident of a break-in the speaker's house which should never be acceptable but he refuses to look at things that matter the most. that to me is not leadership. forget about your party. forget about the election. you're 80 years old. what are you waiting for to actually be bipartisan? do what is good for the country and the elections will follow. he does not get that concept. charles: joe, how do economists
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factor in some of the things brian talked about? because you know it is hard to get all of that on a spreadsheet. >> yeah. charles: i feel like sometimes these economists particularly ones work at the fed never went to a supermarket. >> ivory to youer. >> ivory tower stuff. to me it is fast fascinating. last time out cleveland fed everyone buying up houses for airbnb. the new york fed saw a run on pantries, food pantries. they're talking to different people rather than business leaders. it is giving us a more round version of this now does anyone, jay powell take into account everything brian just said which obviously has deleterious impact on the economy? how does jay powell take that. >> measures of university of michigan consumer confidence has been followed 50 years. consumer confidence is at session reads.
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some series are all-time lows or close to all-time lows. they're certainly picking up the sense of inflation rate and cost of living is very trickery. charles: what about everyone fleeing the cities? >> that is part of it but again from a top down macro perspective, charles, when people's cost of living goes up as seriously as it does, quickly as it does it is a major problem. on the business side seeing small business sentiment weaken. the fed doesn't look at a lot of these metrics. they're trapped into the phillips curve. they believe low unemployment drives inflation. to me that is not the case. it is fiscal stimulus, excessive, zero rates for too long and excessive government regulation. charles: what i hate about them, the unemployment rate they use is the u3, if five million people dropped out of the labor force the unemployment would be zero but would that be good news? >> labor force participation recovered only half the loss where it was prepandemic. charles: brian, you do everything, right? "fox & friends," radio show, talk to everyone, write the books, you travel, are you
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getting there is a sense enough push back in this country to get change? we all say throw the bums out except our bums? >> i've never seen anything quite like it. this is what, thinking about it, what i'm going to do saturday night. we used to address a problem. no one doubted that we had a health care problem. people argued about obamacare. but we knew that health care had to be addressed. charles: right. >> so we used to, we knew the soviet union was a problem. how we dealt with the soviet union was democrat republican issue. now we have a party that refuses to address the issue and wonders why we're so obsessed with the economy, border and crime. i'm astounded by it. they only way they learn to lose blue states. charles: right. >> they need to lose new york. they need to lose oregon and they need to lose senate seats that they thought were layups that is the only way they will understand it. we need a democratic party that will at least identify problems facing america. charles: americans have a
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chance, they have complained enough. they told the pollsters enough. they suffered. their chance to send a message otherwise it won't change. thanks a lot. joe, brian. thanks for the book. i have the 17 of them. if it becomes like a barry bonds card, i'm rich as hell. we're talking fundamental school with erin gibbs at 2:50. first big tech getting shellacked. dan ives says hold up a minute. it ain't over yet. he is in studio next. i earn 5% cash back on travel purchased through chase with chase freedom unlimited. i earn 5% on our cabin. hello cashback! hello, kevin hart! earn big time with chase freedom unlimited with no annual fee. how do you cashback? chase. make more of what's yours.
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a lot of stock market story lines in 2022 but i think this might be the most important. the big question is the bloom off the rose forever? my next guest hopes not. a year ago he could walk into any new york restaurant and get the best table ever. >> now i'm in the back. charles: golly, amazon is rocking my man. my apple is rocking, thank you. but you know, what is interesting to me not just that these names are coming down but how quickly they come down and, you know, for instance i know you have "fortnite." down 13% today. were the numbers that bad? was the guidance that bad? is this even justified at this point? >> i think you're seeing in this risk-off market, any stumble whether currency execution, whatever it may be is going to be exacerbated and look, tech has really been teflon over the last decade. you're starting to see some cracks but i believe we're
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starting to get to a point tech is as oversold i've seen going back to '08-09. charles: i'm reading from the google i did two days ago, two days ago, one headline, crashing back to earth. what wall street's curious meltdown tells us. s-dog outperforms s&p 500 on megacap tech wreck. tech wreck sinks nasdaq. i guess we kind of enjoyed those days and those years where no matter what the news was these names went up, we got a little spoiled. you can obviously argued they were overvalued, now these valuations are coming down to levels in some of these stocks we've never seen before. >> something we saw similar going ba back to '08-09 coming out of the recession. we've coming out of the point where clearly the bloom is off the rose and you will see tough in terms of headcount cut and others but in terms of growth, we'll see 2 trillion of cloud spending in next six, seven years. digital transformation happening
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is not going to stop. when you look at amazons, microsofts what we've seen, especially apple probably the only shining star, i believe this is more, they cleared the decks, they lowered numbers. you're seeing a white-knuckle market. i do believe we sit here six months, a year from now, look at this more of an opportunity rather than the end of big tech leadership. charles: now, the end comes at some point. maybe it is not now. i did this the other day, this segment i talked about going to the 6 '30s, phones, at&t was the leader. then the computer names. old ibm in late '70s, mid '70s. you had the first sort of tech move initially. then again it was oil stocks did well. they led the market. but we've never had anything like this, there has been nothing, never a group of stocks that have been this dominant. you look at a name like meta, for instance, i don't know if you cover it or not but lumped in obviously with all the rest
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of them they say meta is done, i believe people think this is going to happen. do you have a long-term out look? >> meta is a good example. if you look last week, conference call that was ted striker airplane movie with zuckerberg. i think the communication was a disaster. facebook in terms of coal social media that is a go aheaden platform. metaverse is obviously very controversial putting good after bad but that story is not done i believe a lot of these companies are going through transformations. >> right. >> i think that is the best way to put it. i think tech is going through a massive transformation. obviously it's a tough pill to swallow but i don't think it is the end of tech's dominance. charles: you talked about layoffs. 13% of the workforce. amazon will stop new incremental hiring. beyond the business transformation is this the sort of transformation that you want, people want to see in terms of hey, we know you can manage in the go-go sometimes but do have
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the fiscal discipline, managerial discipline, that the test right now? >> that is the test. the street wants to see the management teams, can you cut, preserve margins, preserve free cash flow, guesting through the storm. ultimately bet on management teams. they are spending like 1980s rock stars. charles: right. >> you're seeing economic storm clouds. this is bifurcation a separation right now who will be able to to navigate successfully versus those that will be late to the game. charles: dan, thanks a lot. i will still go to any restaurant with you, my man. you can still get in places i can't. talk to you again. >> thank you. charles: my takeaway on the sec, they set a record amount of fines last year and probably didn't add up to a hill of beans. it is business as usual. we have to break down investing dos and don'ts. we have erin gibbs in studio next. ♪.
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charles: all right, folks, the day after jay powell knocked the stuffing out of markets investors trying to get their bearings. you know, the theory is is that the lower the market goes the more attractive it becomes but
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what's been really happening in real life, we know this, we've seen it, the lower the market goes the more vulnerable it goes and that is what is hurting a lot of people now so when does that change? joining me main street asset management llc, cfo, erin gibbs. we know the old axiom buy sell low high. talking about dan ives, 100 bucks got to be a buy now, 100 bucks to 50 bucks. trying to figure out valuations for instance, they have come down a lot. a the lot of people including you, more than one occasion they're not down enough just yet. >> no they're not. in fact when we look at forward valuations for the technology sector they're only just at levels that we saw at 2019 and they're still well above levels that we saw from 2010 to 2014 which was a slow growth time that was the period that we're coming out of the financial crisis and we had sort of slow
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growth and that is what we're potentially looking at for the next five years is, okay, maybe we'll end up with a mild recession but, it is going to take a while for the entire world, assuming the entire world to recover from this inflationary aspect for the next two or three years and so we could expect another 10% of valuation depression. so lower valuation. which means they could just hold stable? charles: i don't know if that sounds too bad right now. >> right. charles: i saw yesterday the amount we've lost so far in the market which has still been devastating still take us to stock market valuation to gdp that was the exact top of the tech bubble. so in other words, we're still historically extraordinarily expensive. i could take another 10% down but how do you navigate still greater risk to the downside, slower growth. how do you navigate that, still trying to outperform the market. >> right now it is all about macro, right? even though we've got some reports and stocks moving on
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earnings day, other than those four days that they report, the other 361 it is all about macros and what the fed is doing. so as long as that's happening i think you have got to be very nimble. these are willing to trade in and out of market. go look at fear factors, risk on, risk off. or you close your eyes, stay super long-term and stay with those long -- charles: say close your eyes and stay drunk. okay. >> that is another option. charles: outperform the market, i've been doing that for a long time. still i know you're buying something. you like health care here? >> yes i like managed health care. cigna, united healthcare, they both held up extremely well in october. they're also holding up better, some of those value stocks. charles: is this also the notion, by the way they're looking great. for the record i have my subscribers in united healthcare, number one stock in the dow based on share price. i think that in itself ironically brings more buyers in but just the notion that you know the money is coming in,
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right? it is stead -- steady, there are no surprises. that helps, doesn't it? >> it does. more buyers are more willing to buy on those dips but it is still a very small portion. i still think we see a lot of people on the sidelines until we finally see the reduction by the fed, slowing of interest rates and inflation, that may take another couple months. charles: earlier this year you told me your clients were saying hey, we want to step back. you accommodated them. are they saying to you now, should we kick the tires or still in the foxholes? >> i might have gotten away with it on halloween but this week has been so brutal. once again i think it is still time to, the risk-on, sorry the risk-off signals all went red flags on monday. i think it is still a little more time to wait before we can really get in for more of the conservative buyers. charles: there is stuff like the health care, managed health care, solid, strong. >> yeah. charles: dividend payers? >> i think they really need to
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be dividend growers, not just paying but able to increase the dividend. that is one of the key metrics. charles: do they have to be so-called aristocrats, raising them for 25 years? >> yeah, that is actually one easy way to screen is dividend aristocrats, growing dividends. that is a safe bet in this time in the market. charles: they have actually been a great place to be. all right, erin, thank you very much, appreciate it. >> you're welcome. charles: coming up, my takeaway on the sec not going far enough to deter business as usual. will they ever go far enough? we'll be right back. ♪. as an independent financial advisor, i stand by these promises: i promise to be a careful steward of the things that matter to you most. i promise to bring you advice that fits your values. i promise our relationship will be one of trust and transparency. as a fiduciary, i promise to put your interests first, always. charles schwab is proud to support the independent financial advisors who are passionately
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