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tv   Making Money With Charles Payne  FOX Business  November 10, 2022 2:00pm-3:00pm EST

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ing. yeah, dad! i don't want to deal with this. oh, you brought your luggage to the airport. that's adorable. with shipgo shipping your luggage before you fly you'll never have to wait around here again. like ever. that can't be comfortable though. the smart, fast, easy way to travel. what if “just an idea” could become a family tradition? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪ neil: no pain, big gain. see what i did there? free basic cable, charles payne, see you my friend. charles: you could just do it all. neil: i could right there. charles: i hope i don't fumble this. good afternoon, everyone. i'm charles payne this is " making money" breaking right now, you know what's interesting
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one of the roughest years ever gives us one of the best sigh of relief rallies ever. the cpi better-than-expected, the gop will control the house, and labor market starting to see , i've got ed yardeni, kenny polcari and david nicholas all on deck and could the fed engineer a soft landing after all or will they insist on limited destruction i'll ask sheila bear if powell & company will ever acknowledge real live pain and it's a crypto nightmare but is it a lean-in moment? we are going to get the analysis on this saga at 2:40 plus my take on the expectations game how masking reality in the financial and political world eventually has dangerous consequences, all that and so much more on "making money." all right, so november continues to be the month that investors won't forget at least no time soon, right? all of these wild crazy swings
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brings me to the word of the month. crescendo, as its reached gradually increasing sound as an adverb with a gradual increase in loudness and is a verb which i think applies for our markets an increase in loudness or intensity. certainly we've been seeing that a whole lot more with this market. i mean, almost every session this month, the action gets louder and more intense and increases into the closing bell mostly of course has been a crescendo of selling. of course this mornings rally, happened in a flash and it's still picking up speed here, but the cpi better-than-expected, and initial jobless claims surge , you know, and by the way that's what jay powell wants to see more people laid off, and after 11 months of guessing just maybe, just maybe we can all agree we've reached peak inflation, but there is still a whole lot of folks out there who on the sidelines aren't convinced about this market and then there's, of course the question of what's driving inflation after all and what does it p oxrtend for this
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market i want to bring in ed yardeni because you've been in this peak inflation camp for a while. how surprised are you at this reaction to the news this morning? >> well, i'm not that surprised , because i have been thinking that we bottomed back on october 12. charles: i'm sorry i'm sorry. not the inflation news per se, but the reaction to the inflation news. >> yeah, well, my reaction to the inflation news is i'm optimistic about it and i think the market decided that just a couple of ticks down in the inflation rate kind of confirmed that we have in fact peaked and if that's the case we'll see at least a healthy debate at the fed and whether they should at some point pause here, probably early next year. charles: yeah, this last a little bit that we've gotten in the last 30, 40 minutes i think is esther george saying exactly that. they are still committed to unlimited damage but they go at
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a more modest pace it looks like one thing you've been pointing out is your persistent pessimism , as a reason by the way to be constructive, so this morning we get the aii, individual investor and this sentiment surged again, back to 47% from 33%, and not far from the most recent high. you know, we know that people felt after that powell, you know , powell bashed all hopes about a pivot but are you surprised that pessimism is still this bad? >> well, i think pessimism sells, and there's a lot of strategists and others out there promoting the idea that we're going to have a bad recession next year. i think we're in a rolling recession. i think that if we have a recession next year, as we've discussed before, it'll be the most widely-anticipated recession of all-times which suggests to me it's going to be fairly moderate and i think housing is certainly in a
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recession right now. i think auto is going to be in a recession when it be auto buyers go into the dealer and just see what the borrowing rates are , but the service economy is doing just fine. consumer still has about $1.5 trillion in excess savings, so all in all i think the economy is just going to continue to muddle along here and then inflation did in fact peak a few months ago and will continue to moderate. charles: so you do great work when it comes to these earnings and things like that, and so recession we're talking about that that's in the air you've pointed out from one of your charts you can see quarterly earnings estimates are certainly trending lower but is this moving down fast enough, or is it to a point where we could argue it's built into the market yet? >> well i don't think that earnings are going to take a dive the way they typically do in a hard landing recession, because i don't see that kind of scenario. in a soft landing environment, i think earnings are going to be kind of moving sideways. keep in mind that the market
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discounts earnings on a forward basis. the markets looking ahead by roughly 12 months and that means whatever earnings are right now, they are only really matter if they have an impact on next year and the following year, and right now, the next two years still look pretty good. i mean, they are lowering their numbers for the next two years but they are still above where we are now so i think earnings are going to continue to flatten out here for a while, not take a dive, and then after you'll see them move upwards in the second half of next year. charles: i hope so. before i let you go tomorrows veterans day and i notice you did a review on the latest version of all quiet on the western front so my marine corps nephew is coming up going to spend the weekend with us. should we snuggle up in the family room and watch it all together? >> oh, absolutely. it's about outstanding movie. it's obviously based on the novel, actually, novel written by a german soldier who actually lived through it, but
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it's definitely worthwhile see ing. charles: yeah, absolutely we need to do and of course tomorrow again being veteran's day. ed, thank you so much. always appreciate your wisdom. >> thank you. charles: all right, folks want to bring in fs investment u.s. economist, so this morning, this news sort of nudged the consensus now the terminal rate down to 5 from 5.5 or 5.25 i'm starting to lose track but your reaction. is this more than a knee jerk reaction or is this maybe the beginning of something more meaningful? >> you know, that's a really important question, because remember so far and it's hard to think back to the beginning of the year when we thought the fed was going to raise rates 75 basis points. we've already gone 375 and we're expected to hit close to 5% at the beginning of next year so we still have been on a sort of one way ratchet higher of hawkish
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ness still building, and i think today's numbers show that going forward, we may have peaked out. i think it's a little early to really call an endpoint to the fed and say they are definitely going to stop at five but i think clearly the case for slower fed rate hikes has been building and what this data today really does is i think give the fed some cover to maintain their credibility and also just allow some breathing room to see what impact their rate hikes have had on the economy. let the dust settle a little bit charles: right and also if they need to be, be able to jawbone the markets either way. in your fourth quarter economic outlook, i saw where you talked about the strong labor market. i personally don't think it's as strong as a lot of folks say, but i did zero in on this spike on continuing claims. how much influence will that have on a fed decision-making? >> you know, to me, initial claims and continuing claims is
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such an important educator to watch. i call it the canary in the coal mine and right now the canary is still singing. i think your point is really important. does the labor market feel as strong as it is, as the numbers would reflect? i think what we're experiencing is the fact that we just don't have as many people out there looking for work. you had so much geographic dislocation and the reality is that going forward, employers will probably guard workers more preciously than they have in prior business cycles, but i think what we all experience is the fact that despite a higher inflation and sluggish growth, there's still a real scarcity of labor out there but it doesn't necessarily mean the quality of jobs has improved and that's an issue. charles: we saw where leisure was by far the leaning job for last month. the yield curve inversion. it seems to be screaming
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imminent recession but i did see again in your report where you're saying the debate about the recession is far from being settled, certainly won't be settled in the fourth quarter. when will we get a clearer picture? >> so to me, my expectation is that we probably will have a recession next year, likely in the second half of next year, and let me just remind everybody that typically, the yield curve in vertexes. it's a good leading indicator of recession and this is something else to think about with the employment data. that's a concurrent measure of inflation of recession. i think of the labor market like the weatherman whose standing under the umbrella in a rain storm saying it's raining. by the time you're there it's too late. charles: [laughter] all right >> but i think the in verted yield curve is a leading indicator of a recession but it doesn't tell us very much about how deep or severe a recession could be and i do think we haven't had a long
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expansion, we still have built up demand for housing, for autos. there's every reason to think that if we do have a recession, it may be more mild. remember the last two recessions have been truly very deep and very severe. charles: lara, thank you very much great stuff always appreciate it. thank you. >> thank you. charles: folks i want to bring in slatestone wealth chief market strategist kenny political. so the market took off like a bat out of hell and i'm looking at the names leading the way and guess who i'm thinking about kenny polcari. these are the names you've been buying these names, the amazons taking off, the microsofts are taking off, and so i guess the question right now is you think folks are just in there by ing knee jerk, sort of buying weakness for a trade or maybe there's something sticky about this. >> no, i think this is a little bit different. i think there are certainly some people buying for a trade but i think there are other people that saw these stocks that were completely dislocated for no apparent reason.
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yes they were raising money, i get it but they weren't dislocated because any one negotiation news, they were dislocated because asset manager s were trying to raise money really quickly and you can easily raise money in these stocks and they end up being dislocated so today's reaction, the market is really taking back all of what it lost yesterday and then some but it provided an opportunity in those big names that you and i have been talking about for the long term investment or so it's not surprising to me at all. i don't think most of it is a day trader. i think a lot of it is really putting money to work. charles: so we've seen these bear market rallies all year long. i'm looking at some of my stocks here, some of my subscribers. i have a stock up $35 and we're still down 16%. when do we start going to the lower level names beyond these big mega cap names you feel ultimately will find their way back. when do we start feeling comfortable enough to look beneath higher risk but higher return? >> well, i think you have to get to a point where you are going to feel comfortable that
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the worst of the volatility is over, right? because while i think we're going to have this rally to year-end i think we're only going to end right here somewhere between 39 and 4,000 is at year-end, and until you get a sense the volatility is really kind of subsided and we know what the election is going to bring now, we know what it's going to look like congress, we have a sense of what potentially is going to happen then i think you can start veering off those big mega cap kind of staple names i've been talking about, you know the stuff people need, and venturing into the stuff that has gotten a little bit more beaten up that has some higher risk, as you go into the new year. charles: so let's talk about that because i got the notes from the producer, and i'm a little worried about your acronym game, my man. stpn. i can't find a way to make it roll off the tongue. how do i say that? you know what? i'm not buying any stpn yet. instead of buying stpw, you know , you've got to work the acronym game but explain to
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the folks watching what's the difference between stuff people need and stuff people want? >> okay, well stuff people need are exactly that. so you need healthcare. you need consumer staples. you need utilities. you need energy. stuff that you want, um, maybe things like consumer discretionary, you want to go out and buy a new wardrobe, re furnish a house when you don't necessarily need to, right? you want to but you don't need to do it. so that's really the difference. so i'm still and i have been playing this game, you know that that i've been, i still own a broad diversified portfolio but it is overweighted in the stuff people need versus stuff people want. it'll stay that way until we get into the end of the year and the new year. charles: kenny i'm going through these charts over the weekend and iran into a map, a culinary map of europe. according to italy and i need you to corroborate this one for me, so here is italy. real food is in this region, mostly safe to eat in this region, caution is advised, fat ening, literally tasteless,
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aestheticly tasteless, and toxic oh, by the way go out this way to america, fake pizza, go out this way to china, fake pasta. is this real? do you corroborate this? >> [laughter] where did you get that? i think that's perfect, yes. 1,000%, right around the middle where you're drooling you go to italy where you'll find the real food. charles: yeah and just think about that. that we actually tried to get the italians to eat pizza with pineapples on it. kenny you're the best, my man. can you imagine, pineapples and ham on a pizza are you kidding me? charles: what can i say. work on the acronym game. folks, of course i want to hear from you whether it's a comment about the show, the guests anything. we love exchanging ideas with you tweet me @cvpayne. bernie tweeted yesterday saying great job from the sentiment expressed to the interaction with the studio audience especially i love the falling off the back of the truck comment. i'm from jersey i get it nice work juggling it all. thank you so much yeah we all
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know what that means. coming up what's historical for the market in 2023, my next guest is going to give us a look and also, breakdown a lot of other things. we're going to go to fundamental school right after this. ♪
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charles: so, during periods of intense pressure and uncertainty the investors always gravitate to history and of course, more than normal we're doing that right now. what we're doing is sort of looking for the right parallels. welcome to fundamental school. my next guest says 2001 is the right comparison for what might be in-store for these markets as we head into 2023. with me now founder of marco compass, and alf, you've got four main parallels between now and then, i just want to share with the audience, excessive animal spirits, inflation, a fed too tight for too long, and macro indicators that are all pointing south. let's go over some of these. let's start with this sort of notion of animal spirits run amuck. i've got a chart here and it
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made a 280% move and what's interesting, i could take this same chart and layer it and cross it out and this be your nasdaq chart from 2000 that you talked about to 2001. is this what you mean by this sort of crazy, you know, animal spirits run amuck, and the thing i wanted to ask you is okay, i remember 2000 and i remember all of that stuff. is ark more of a tiny sliver or reflective of the entire market >> great questions, charles, and thanks for having me. so the parallel between 2001 and 2023 is very compelling, and the animal spirits were driving the market in 99 and 2000, are very very similar to the animal spirits that drove markets in 2021 but actually, think back of 1989 the in per quality palace of tokyo was worth more than california so it was japanese realistic market bubble. in 1999 anything with a dot com
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after its name was worth buying at 100 times earnings, 200 times earnings, even if there were no earnings. in 2007 we fought five houses each in the u.s. with variable rate mortgages and no income and that was fine. in 2021 people threw money at anything that spelled like tech revolution or what have you. the behavior is always the same, and there's a strong similarity between 1999 and 2000 and 2021 behavior and now in 2022 like in the second half of 2000 we are seeing this bubble deflating slowly but surely which makes me think, charles, what comes next is actually 2001 , and in 2002 do you remember what happened? the federal reserve pivoted by cutting rates by 150 basis point in three months between decembe. that was a proper pivot. what do you think the stock market did back then? it dropped another 12%. the dollar appreciated. why? because we were in an earnings recession. the labor market was weakening. because the damage that was done through the economy, through financial markets in 2000 as the
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fed hiked rates to deflate the bubble is very similar to what will happen again in 2023. charles: and by the way we do have one of the charts you used in your report here to underscore these rate hike regimes because they were too low for too long tried to . caup in the wrong environment, stayed the duration was a long time, and the result was the s&p off 25%, 30%, no gain and we'll see what happens here. by the way when you brought up japan i hope we don't have that fate, because apparently, nothing nothing went right for japan after that. let me just talk now about your new program, because i've got to tell you. i ran into you. i was just looking around and bumped into you on social media and really your work is very very impressive, and i want to kind of sort of share now because you're expanding macro compass even more, you want to help level the playing field for retail investors which is something i'm into so tell us
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more about what you're doing. >> so charles, thanks for the kind words from your end i come from the ivory tower. i've been a financial pro investor. i manage $20 billion book before trying to share my knowledge with the public. it always bugged me that the financial institution at the pro investors have access to top level knowledge, top level data, top level network and the retail investors left behind and that really bugged me so i started with this newsletter, the macro compass to share this knowledge but now i'm graduating that platform from a newsletter to a holistic macro platform. the idea is to send people to a learning journey. give them access to data. give them access to information which is then generally reserved for the ivory tower so they can make more informed decision and can become better macro investors overtime. so i'll do reports, courses, interactive tools, macro data, etf portfolios, anything that helps people become a better macro investor. we need to close that gap between wall street and main street really because it's just unfair. it shouldn't work this way.
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charles: most people get to that ivory tower and pull up the laid er and look down and sanctuary too bad. thanks a lot and congratulations folks so the crypto saga is still unfolding we have john nej erian, who knows a thing or two about this area, in fact where does it go from here and also, there's a flashing red flag out there and i wonder if the fed will ever acknowledge it called real life pain, folks. we've got former fdic chair sheila bair on deck. she's next. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this.
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blushing. the current fed chair seems to have a chip on his shoulder these days, as his internal fortitude to really level destruction continues to be questioned. joining me now former fdic chair sheila baird. from senator shelby of alabama who actually dissed him in front of the whole world to the stock market which from time to time seems to have persistent doubt that powell and the company would go the course, do you think that's a driving motivation? because i'm kind of worried that jay powell may prove us go the extra way to prove that hey i can do it when we don't need him to go that far. >> right. well he has pivoted before, so i think that's created some doubt, but i'm impressed so far. he's shown resolve and fully backed by the board, by the fomc , which includes some of the regional banks as well, on the course he's on now, so so far so good, but it's going to get much tougher. we're not in a recession yet if
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we get into a recession he's going to have fairly overwhelming pressure to change course. charles: you know, sheila, i've got the sense that i know everyone voted the same, but when he came out with the statement, i got the sense that that wasn't jay powell speaking. it sounded like maybe someone else so do you get a sense though that there's some rumbl ings within the boardroom? >> well, i mean, i think they are very cautious about any external conversations, so i can't say. i think this is really difficult time for the fed, difficult decisions. i can only assume there's robust discussion internally. that's healthy. they have got a lot of good smart people around the table, so that's healthy, but yeah, i do believe your perception i agree with this is more of an institutional position not necessarily one being driven by him. charles: how does this morning cpi report give the fed room to step down and
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eventually, you know, handle reports that suggest that they pause, right? because i think one of the things people have been concerned about because of the lag effect, to bring that up , that there's going to be times when we're going to get economic data next year that says hey, a pause is reasonable here but there's a sort of pledge not to do that. >> right, right. well, it's a good question. i think it does give him a little wiggle room. it's only one month, you know, we had good data in july and august and then the month-over-month numbers for the most reliable ones popped up again. the headline month-over-month increase is the same. the core ticking up was down a bit that was positive but we need several more months of data to know if this is really on a downward trajectory or again just another blip as we've seen before. i do think, i'm not sure, pausing be a good idea but slowing the pace maybe wise, and
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as much as i want inflation to be lifted and as much as i admire paul volcker and his successful fight there are a couple of key differences now than when volcker was fighting inflation. one is the baseline, where the fed is starting is so much lower, so the fed funds rate which is the short-term rate that they target, was at .08% at the beginning of the year. it's almost four now. you're looking at it like a 5,000 percent increase over where you started. you know, even when volcker was raising rates it's more like 50% increase year-over-year, so the whole world has become so used to these near-zero interest rates, and governments in particular have levered up a lot , again, i think when volcker was chair in 1980 government debt-to-gdp was around 30% and now it's around 122%, so that limits the flexibility to the fed given the massive reliance on debt especially in the government sector to be raising financing costs very
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very rapidly, withdrawing from or curbing purchases of government debt. i think they need to go a little bit slower. charles: let me get your thoughts on disarray in the crypto market because the november financial stability report at the fed they wrote about the risk of stablecoins pegged to the dollar this morning tether dipped under dollar and it's not the size of the money-market funds but when the money-market funds in 2008 broke the buck, all hell broke loose. just how much of a risk of a systemic risk do you think crypto is right now? >> so i think the good news and the bad news is i think cryptos pretty irrelevant to the real economy. i believe in blockchain technology. i think it has a lot of potentially valuable social benefits but most of the crypto that trades on blockchain is mostly a vehicle for speculation and a relatively small market compared to the rest of the economy and certainly the
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financial system, so it's regrettable that we haven't taken crypto in a way that has socially beneficial relevant uses and the real economy but it maybe good news now because this is a big shrug, there's pain and suffering for those who have exposure there, but in terms of the vast majority of the population of the financial system, no, i don't think it's going to have a big impact. charles: and of course so the fed, i mean because they have ranked it within the top 10 of potential risk factors in the past, and it wasn't in this last report ranked but they do of course mention it in the report itself. sheila -- go ahead i'm sorry you get the last word. >> just the individuals who invested and i feel their pain it is very risky for them but the broader economy needs to know, that's not the top of my list let's put it that way. charles: sheila always great talking to you thank you so much see you. folks coming up the dollar falling to a two-month low. are we out of the woods there yet? we've got rick ross, we're going to chart school. this is one of the most important charts you'll see but first i want to pick backup this
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crypto conversation with john najerian, give us an analysis not just on ftx but maybe a lehman moment, right after this. ♪
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charles: so, the fatality saga rolls on as the world finally hears from sam bankman-fried, on twitter, this as reports are that the company actually used money from customers accounts in an effort to salvage their business and these exchanges, they really have been some nasty business and many are still wondering if cz, the founder of binance, actually orchestrated all of this. take a look at the tweet that sparked the runoff on ftt. joining me now markle rebellion co-founder john najerian. you were an investor in voyager
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that got slammed after the whole three arrows debacle. how likely is it this latest blow to the industry could actually become a lehman moment? >> um, i think it is already, charles, a lehman moment. i say that with limited crypto. i don't think just like your previous guest said, i don't believe this is something that takes the stock market down with it. it's just too small. i mean, it's less than one-third of the size really of the crypto market of apple, just by itself, and that's all of crypto. it went, by the way, charles from about 1.07 trillion market cap last saturday to about 785 billion market cap because of this ftt and binance that almost happened, and because it's now much, we're seeing a re bound in crypto, much like we're seeing in the market,
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that's our back end favor, but i think that the overhang of people not wanting to leave their crypto on these so-called exchanges, i think that will continue for months and years, but it will continue to grow. this is just kind of i like to say lorde of the flies meets the lehman moment for crypto. charles: do you think, could something good, i hate to say it but could something good come out of this , maybe an urgency with respect to regulations? maybe some sort of fdic kind of insurance plan? something that will allow people to be able to sleep at night knowing these exchanges aren't going to use their money or fold overnight. >> yeah, i think, charles, that a lot of us got involved in crypto because of the decentralized nature of it. the fact that the fed couldn't just pump money into the system and so forth, and so a lot of
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people who thought that they were making our money worth less by printing more money, a lot of them really listened to what sot oshi nakamoto was saying in his white paper and unfortunately, the lorde of the flies part of this is that there are so many people, even really smart people like sam bank pan freed or cz, they are really smart people but they have done dumb things. they haven't learned the lessons people in your industry and mine in the stock side of the world that we've learned like for instance having to put up margin , having to have when you borrow to sell short, you have to put up 103% when you're doing that with stock, and yet, with crypto, they did it with a handshake? that doesn't make any sense, charles. that's why i say there's too many kids and not enough real effort to make this a viable
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currency going forward. a lot of people like that, but i agree with you, we're likely to see more regulation, at least in the united states. charles: i was a little skeptical about too much regulation initially but they need guardrails without a doubt so you have been bringing up the markets and i want to go there because it's a great day and want to bring in nicholas wealth management president david nicholas because david, you have been doing, you had, you know, you actually have been doing extraordinarily well. what are you doing here though? because you've been somewhat cautious. are you doing anything as a result, more because of this cpi number and at least the action we're seeing today? >> yeah, i think it confirms our bias, which was bullish, right? we've been 90% net long, holding about a 10% shortened portfolio. the reason i didn't dump it is because i was waiting to see where the final results were for the election so we held on to it but charles there's a name that's a broken record on it, if you look at the action in that name today it's a giant payment
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processor out of europe. they just announced a huge partnership withins tariff cart. my wife loves instacart and we keep that company in business with the amount of groceries with three kids at home but this is a name you can double your money in this stock because revenues continue to grow, bottom line continues to grow but we like pairing a big growth name like aiden with a name like allie so if you look at allie financial, 4% dividend but if you look at the action today i think a stock like allie, which is down 40% year-to-date, charles has gotten so beat up because the outlook the market is painting for financials is so bad and i think that's overdone, so i think you could still put money to work in a name under $ 30 share get a 4% dividend or still be buyers now and do very well, charles. charles: john let me ask you what are you doing on the stock side right now? >> well, charles, i've been buying it for the same reason i was buying meta last week, and that is all they've got to do is
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cut back on their capex, in other words, if they don't spend as much to build-out various portions of their business, whether that's aws or their other businesses, i think the stock just zooms, and today, it was up at one-time, i think $118 billion, it's a 10 billion share float, and, you know, it was up 11 bucks or so. that's where we're getting those numbers, so i think amazon in particular, once it stops hurting the regular joe's and janes by increasing as fast as they are, i think they go right back to using a service like amazon, and for that reason , i'm very bullish on it, and like i say, cutting back on capex was a big part of that with meta you saw what that did and i think it's going to do the same for amazon. charles: meta announced they were laying off 11,000 people and the stock hasn't stopped going up and one company that assetsed in capex.
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john, david, thank you both very much. david we've got to bring you back soon because there's more questions i have but we're out of time sorry my man. coming up, i'm going to give you my takeaway on realities of the expectations game. also the dollar, that's been the key folks. we don't talk about it enough. it's making a great move right here that bodes very well for this market but we're going to get more details from rich ross, he's next at chart school. ♪ money changes everything, i said money, money changes everything ♪ vo: it's a new day. because covid vaccines just got a big update.
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charles: so, when that cpi report came out this morning the first thing i did is looked at the bond yields, the 10 year bond yield and the dollar, via the dxy, because for me these are the two main gauges influencing the stock market more than anything else. welcome to chart school joining us now evercore isi head of technical analysis, rich ross. rich, let's start with the dollar. this happens to be in one of your reports. a break below 109 will be very bullish risk, well we're at 108 right now, my man, so tell me, where do we go? what happens? >> all right, we're one for one today, charles. charles: let's stop now. >> exactly.
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so what i love about the dollar is the symmetry here. look at the dollar breakout in the middle of last year. that's when the bear market in equities began and the bull market in the dollar also began, so my thinking is if you break below that same level of support that's the 20-week moving average it's defined the bull in the dollar, the bear in stocks, then shouldn't a new bull market have commenced on that break? i'm going to ask and answer the question and the answer is yes. charles: i'm with you. i don't think the dollar is getting enough coverage. its been perfect in terms of its relationship with the market, so inside the market we've been talking for maybe a month now. the new leadership. it's hard to believe industrials lead the way but they have been acting great. we have the industrials versus the overall market and this is your chart. great break out here looks like maybe resistance here and continue to be off to the races? >> this is one of those battles within the battles charles. big tech continues to hold sway over the averages but what we've seen in recent weeks and months is that it's healing from the
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bottom-up from the inside and industrials are a great example. keep in mind we're all talking about globe l recession, potentially depression higher rates, all is legitimate but look at the action in industrial s breaking this five-year relative down trend versus the market itself that's very bullish not just for stocks but for the economy more broadly. charles: okay, so i'm with you on everything that you've done so far. i love this by the way. more room to run, reference of course to moore's law, which by the way, people said moore's law is dead, it doesn't work anymore , for that matter the chips are dead as well. they certainly have their moment s they have been under some pressure here. are they passing a test right here? >> it's a very important test here. look, they aren't dead but clearly they have been very sleepy along with tech more broadly. again we went from industrials to semis which are very sick had it call industrial part of the technology sector but this is a long term chart that takes us back to the financial crisis, charles and what we've seen is when you pulled back to the long term trend, that's the 50 month moving average that
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has defined the bottom back in the european financial crisis, the mini recession of 2016, the 2020 pandemic obviously and here we are again today, 50% decline back to that long term support. this is where the rubber meets the road. there's more upside in semiconductors. charles: more, and you slipped it in there again, very creative all we talk about is chips and it's hard for me, again i agree, i believe long term that where the chips are done, so a lot of red, we're talking about microsoft, right? this is a stock that almost everyone owns, or they want to own. again, uncharacteristically, recently, its been under some pressure like everyone else, but a big winner today has it passed the test here and could we get backup here just looking at the chart, do you think we could get back and retest the highs? >> i do think that we cannot just for microsoft but for stock s more broadly when you keep in mind look people have compared the current situation, high inflation, et cetera, bear markets to the 70s. each of the four bear markets in
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the 70s retested those highs within 12-20 months and we could see another example and again microsoft is the second-biggest stock in the s&p, falling on hard times this year along with mega cap tech more broadly 40% decline down to the same level of long term support marked major market lows in semiconductors. the s&p, the dow, et cetera, and look at the lower panel that's versus the market you're sitting on relative support, absolute support lost 40% of your value, this is where you're a buyer of microsoft not a seller charles. charles: great stuff you convinced me on all four. great stuff i appreciate it. folks we'll be right back. l sted 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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