tv Making Money With Charles Payne FOX Business November 17, 2022 2:00pm-3:00pm EST
david: i'm cheryl casone in for charles payne. this is "making money." stocks flat but bond yields are rising. today's parade of fed signal rates need to go higher. one speaker in particular rattling markets earlier today. kenny polcari, paul schatz, kathryn rooney vera are here to guide you through the turmoil. new ftx new ceo. he went through some of the biggest bankruptcies including enron. he said he has never seen anything as bad as ftx. there are new concerns that the close ties of sam bankman-fried and his inner circle had with the democrat party. has elon musk solved the quiet quitting happening at twitter? beverly hallberg gives her take on this at 2:45.
plus we're one week away from thank giving. what are you thankful for? tweet me @cherylcasone. later in the hour i will share with you what i am giving thanks for. of the all that and more on "making money". ♪. cheryl: the market paring their losses after hawkish comments earlier in the session by st. louis fed president james bullard he said rate hikes have only limited effects on inflation, around should go to 5 to 7% rate. he had chart. kenny polcari is with us. bond yields spiked on bullard. he had a big chart he was showing. the yield curve inversion at its steepest in 22 years. the biggest question, does this predict or guarranty a
recession? >> depends on what yield curve you use. the most importantly the 10-year and 90 day t-bill recently inverted. that is the final nail in the coffin that says we're going to have recession. likely going to be in 2023 but look, long before the recession officially begins, interest rates, at least in the long are going to peak. you could certainly argue rates have already peaked. bullard's comment to me are absurd because you've got 225 basis points much rate hikes. they're not even in the economy yet. i feel like we're back to bernanke, no contagion, powell, inflation transitory, yellen, no financial crisis left in our lifetime. he is making the same comments that don't have any basis behind them. let the rate hikes get in the economy first. let's worry about if inflation is a problem then. i don't think it is going to be a problem at all once the economy rolls over. cheryl: kenny, maybe he felt he needed to address the elephant in the room. obviously that is interest rate
policy at the fed. he is a fed governor? >> he is and he always seems to make markets move every time he talks. he seems to be much more aggressive. look i'm in the camp, i'm more in his camp i don't think they will go into 7%. goldman came out an confirmed 5.2% terminal rate. they indicate ad month ago. i'm in that camp. that is where i think we have to go. i don't think the heights we've seen made their way through the system completely i'm still not convinced they have gone enough to tackle inflation. i still think there is some room to go. why i continue to see anxiousness in volatility. >> anxiousness obviously is the consumer which is 2/3 of the economy spending. yesterday we got the dour earnings report from target. that was a rough one, a rough quarter, the outlook was bad. today, fast forward, kenny you and i were in the morning on that one, today you heard kohl's. kohl's talks putting our
guidance, fourth quarter, no more guidance. change of leadership. went on and on. >> right. cheryl: then in the conference call talking about the consumer. inflation will hit the shopper. it was just a mess. >> i think it's all true. the other thing i thought that was interesting was in the target conference call yesterday they talked about how shoplifting is up 50% in their store. that is part of that conference call. i get it. but it is, interesting that they should throw that in as a comment as part of the earnings call that they were on. one way or another i think paul the indications the recession is coming. already started. i'm in the camp we already started. cheryl: we had two quarters of negative growth. call me crazy isn't that a recession? >> yields are inverted six months. twos, fives, tens, already inverted. 10-year just inverted but i think the recession is already here. cheryl: paul, going back to the retail story, we're going into the holiday season. i'm not sure which way anybody needs to look at this point. you're get being two different
stories. if you're listening to walmart things are great especially in the grocery business. we're seeing people are not shopping at target. they're downgrading to walmart. looks like people are downgrading from saks fifth avenue and they're going to macy's. kohl's i'm not sure what else we see about kohl's. >> remember kohl's because it has a past with changing ceos. is this kitchen sink quarter? we don't know yet. but certainly may be back-to-back ones. target bought poorly stuck with all merchandise they can't sell. walmart is the cheap of all cheap. if the consumer is weakening, consumer credit's up, delinquencies are up, we know the consumer is more and more on tap. 2.5 trillion of excess savings from the pandemic is, whittled away. cheryl: savings rates are going down to your point. personal saves rate. >> pier not country of savers. we're a country of the spenders.
before the recession we an car whether it is done or start next year. consumers go to budweiser than heineken or craft beer. now walmart from target. bj's and costco do better than their peers if the consumer rolls over. cheryl: start with the outlook. looking towards 2023. ubs had a net yesterday, kenny it was emerging markets. betto 13% jump for emerging markets. what does that tell but the u.s. stock market? >> i don't play in the emerging markets. an area i don't go to but i like the u.s. stock market. a lot of opportunity created in some of these prices. could we see downside? look at damage that has been done. actually really decent names in the u.s. has been a used for source of cash therefore they get do h dislocated. i'm bullish into 2023 with the u.s. economy. cheryl: okay. >> regardless how deep the recession is in 2023, stocks are
up. bad recession up five or 10%. moderate recession up 15 to 20. if the needle is threaded they're going up 30 plus percent next year, even if we have rough start for next year. the bond market may be the story next year. i'm an eternal optimist. cheryl: i like the optimism. i appreciate that. before we go, kenny, we got data about thanksgiving. >> yeah. cheryl: it will be 20% more expensive next week for families to make thanksgiving dinner. >> right. cheryl: all of these things are up. turkey, there is 21% gain, stuffing, 69%. peas are up 23%. i'm doing green beans. i don't know. what do you say about all of this? >> i think it is true, right? we've seen it, we heard it, we understand it. all you have to do is go to the grocery store to see it. people will for a way to spend a little less. sweet potatoes are abundance. >> love them. cheryl: cheaper and better for you. >> i think people will be a little more sensitive to how
much -- always leftovers in the thanksgiving table. maybe cook a little bit less to try not to have that happen. cheryl: according to jeff bezos we're not supposed to buy anymore tvs, curb our spending. >> right. cheryl: the guy that has a 500 million-dollar yacht. >> paul, kenny, great to see you. >> thank you. cheryl: well the ftx fallout continues as the crypto contagion hits market sentiment and the headlines keep coming. the new ceo of the company saying he has never seen such a complete failure of corporate controls. joining me now, custodian bank founder and ceo, caitlin long. so great to have you here. there is so much to unpack with this story. the fallout, more calls for regulation, which shouldn't be a shocker. you have marks even waters wants answers even though there are pictures of her with some of these crypto executives. sam bankman-fried, sam bankman-fried reportedly told vox, quote, expletive
regulators. they can't distinguish between good and bad. these are some of his comments. he is listed as part of speakers for the upcoming "new york times" event with larry fink and janet yellen. does anybody need to listen to this kid anymore? are we not just done with sam bankman-fried. >> oh, boy, no one needs to listen to him anymore, that's for sure. the bankruptcy receiver who is acting as ceo listed his first day report today. he is the gentleman who was in that same roll with enron and he said he has never seen anything like this in his career. this was, it does appear that there were many potential crimes shall we say? and certainly breaches of fiduciary duty and contracts but this was an offshore exchange that was not regulated. my response to all of this as one of the good guys in crypto
so to speak, good riddance to the grifters. there are many others like him. some of which have been flushed out. some of which yet to be flushed out and what happened in the absence of regulation a lot of criminals and scammers filled the void and so i do expect that there will be regulation coming out of washington. there is the consensus forming that those of us -- cheryl: at the same time i hear what you're saying, i already heard the comparisons this is dot-com 2.0 and that dot-com number one back in 2000 when the bubble burst there were some survivors. i heard that argument. but on this side of it because this is so bad in particular, maybe worse than enron believe it or not. it also smells like bernie madoff. >> yes. cheryl: looks like a ponzi scheme at the same time. all of that together i can't help but ask you do you think this really does contaminate any interest in crypto going forward? >> in crypto trading, yes, cheryl, and it should.
it is not possible to leverage bitcoin safely period. ftx was offering 125 to 1 leverage. the onshore regulated exchanges were offering 2 1/2 to 1 leverage still in my book is too much. our bank would never offer leverage like that. but, he was able to do it and get away with it because he was offshore. and, i, i saw comparison of him to bugsy siegel. there were shakedowns being down. all of this is now coming out and i think that you know you mentioned made made. i mentioned bugsy siegel. these were, these were, bad folks and good riddance to them. let's get this out of the industry but, their is signal through the noise. last week elon musk announced that he is going to turn twitter into a peer-to-peer payments platform. he will be using one of these technologies. those of us who are grids i willed veterans here for the
technology never here for the leveraged games and never here for trading are excited about that. cheryl: if you do digital, say that you zell or venmo, those are dollars, those are backed by the federal reserve of the united states of america. it is a backed currency, a guaranteed currency. there is no guarranty underneath cryptocurrency. that is what we've seen implode and that confidence has been shaken? >> that is, those old payment rails are running behind the scenes for apps like venmo. it still does take a couple of days for transactions to settle and what's new about the new payment rails you can move u.s. dollars around the world in a streaming nature at roughly free and near instantly and these technologies will be operating in the background. so folks won't even realize that the payment rails have been swapped out. kind of like the old copper wire networks were swapped out from the telephone companies for
voice over internet protocol about 20 years ago. cheryl: i don't know. call me crazy. i guess i'm old-fashioned i like having a bullet of a bank behind me, a real run, not ftx. >> for sure. cheryl: caitlyn, appreciate it. i know what charles would say right now. but anyway, we're staying on the ftx disaster. there are new questions about sam bankman-fried and his inner circle connections to top players in washington, d.c. in particular, democratic connections. and there is this, did elon musk solve the quiet quitting problem? the ceo issuing a ultimatum to his staff, commit to hardcore twitter or there's the door. beverly hallberg takes this on at 2:45. ♪. lidays
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it will release your fat and it will release you. cheryl: sam bankman-fried whose historically been considered one of the brightest minds of crypto now the fallen superstar is facing possible extradition from the bahamas and his inner circle is beginning to unravel. kelly o'grady with more on the story out in los angeles. you've been on this from the beginning, kelly.
what do you have? reporter: good to see you, cheryl. what makes the whole story sensational is the people. let's start with his family. we're learning that they have deep ties to democrats just like sam bankman-fried. his father joseph helped senator warren draft a tax bill. his brother gabe has meetings with white house officials also have been raising eyebrows and those ties are drawing questions about critics how much influence the former founder had on the soft regulatory environment that may have enabled the mess ftx currently finds itself in. the bigger question mark is had is team. the new ftx ceo underscore that in a court filing saying quote, never in my career have i ever seen such a complete failure of corporate controls. the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals. the situation is unprecedent the. harsh criticism from the guy brought in to clean enron up, right? the major questions are being raised by sam bankman-fried's
rumored ex-girlfriend, caroline ellison. she was the ceo of sister company alameda research. here she is in a previous interview sharing how careless they were with fund. >> we tend not to have things like stop losses. i think those are not necessarily great risk management tool because they often sort of lead to you being closed out of your position relatively low liquidity situations and losing to that, kind of like exacerbating momentum from liquidations and things like that. reporter: cheryl that is akin to gambling with money, right? i used to work on the investment side. before you put your money in, you look at the team. i spoke with a number of vc sources who did invest, they shared there wasn't enough due diligence here, cheryl. cheryl: now you've got others in the same space on the defense because of this whole mess. kelly, thank you very much for that live report from los angeles. well for more on this story i want to bring in congressman french hill, member of the house financial services committee. congressman, thank you for being
here. >> you bet, cheryl. good to be with you. cheryl: lots to talk about. kelly's report shows the numerous red flags involving ftx. how did those flags go unnoticed? >> i don't see how they could go unnoticed. the secret to success in business is careful, prudent, due diligence and anytime you're involved in a transaction or putting your money at work somewhere where you don't have all the facts and the fact that this took place and the loss of terra in the spring and the collapse of ftx tells me that investors don't really know what they're doing in this space and they're too trusting. some of the purveyors of action in this space, both in the exchanges, the wallets and the coins, are perhaps not following the law or common sense. cheryl: would you be more comfortable with cryptocurrency if there was more regulation on the industry which it does look like that is what is coming next? >> well, look, in the house
we've worked under patrick mchenry's leadership and plaques maxine waters leadership to try to find a bipartisan solution defining what are digital assets, how they should be valued, how transparent their financials should be and how to protect people that want to use them, to innovate around this space. i think this moment, this collapse will cause that bill to advance in the new congress. i look forward to a hearing on the most recent crisis in early december. cheryl: congressman, i have to ask you about something that happened yesterday on the hill. our correspondent there, hillary vaughn, fox business did catch up with maxine waters and specifically said that there was a lot of donations, political donations. he was the second largest contributor we believe to the democrats during the midterms. she said what should be done, should any be given fact. where is the funding. waters response money was given
on both sides. how do you respond to that question, sir? >> i think if you took money from ftx or a ftg executive it would be wise to give it back or give it to charity. that is for each member to decide. i think you're right they attempted to influence and have people look the other way both in the house and senate by giving away millions of dollars in campaign contributions when they should been spending millions of dollars on legal fees to properly structure their business and properly hire the people to try to run their business because they failed on all accounts. cheryl: yeah. your committee, house financial services, you're calling on sbf and binance to testify on this collapse next month. that is assuming sbf isn't in jail to be clear here, there is a push to extradite him back from the bahamas to the united states. have you heard from representatives on either side? >> i have not. the ftx hearing is important. i think it's a seminal hearing. i think the based on the new ceo
of ftx referring to this something worse, more complex, more devious than enron, that deserve as full public hearing and i hope we start that process in december at our hearing. i encourage both sides who have been called to testify to bring, bring themselves to washington and present themselves before the committee. cheryl: what do you think the end goal should be for the committee? there is a lot of talk about in particular when the republicans take control of the house there, will be a lot of investigations launched. whether it is hunter biden, whether joe biden or afghanistan, there is a lot of talk. on the level of hearings, investigations coming from you and your colleagues once you take control of the house, where does this lie in that order? >> well look, we think in the house financial services committee that yes, we have an oversight responsibility over the mistakes by gary gensler at the sec for example, but we also have an obligation to meet our commitments to america for
faster economic growth and more opportunity and one of those things is, how do we safely innovate in the digital asset space? i think that will be a top priority for the committee in early 2023. cheryl: you plan on, assuming to ask gary gensler meeting with sbf? >> i think that question should be asked. there were u.s. investors in the offshore exchange with ftx. u.s. investors were at risk. sec had the responsibility to ask how ftx worked and how investors received that information to process business with that firm. cheryl: congressman, we're looking forward to seeing all of that. thank you for being here. >> thanks, cheryl. >> have a great day. if we don't see you, happy thanksgiving, sir. coming up, the number of layoffs in tech hitting 120,000. is this only the beginning? plus mortgage rates are the biggest drop in more than 40 years but is it enough to keep
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♪. cheryl: as mortgage rates hover just under 7%, the cost after u.s. home may require americans to make at least $100,000 annually. that leaves many americans priced out. gerri willis joins us now with more. hey, gerri. >> reporter: cheryl, that is absolutely right. let's start with those interest rates. want to explain what is going on there. they are falling down to 6.6%. that is nearly half a percentage point today. so that is a big change, but when we look at what is going on with the affordability, that is,
really testing americans. these days if you want to be a homeowner you need to earn at least six figures as spiking mortgage rates and housing prices push monthly mortgage payments through the roof. new data from redfin showing a homebuyer has to earn $107,000 as you see right here to afford the 2600-dollar monthly mortgage payment on a typical home. that is up 45% from a year ago. listen. >> the income needed to buy a home is well above the what what the median income is in this country. that means you have to be a part of the upper class to be able to afford a home now. previously homeownership was a way to enter into the upper class. now you have to already be there to be able to afford that starter home. >> reporter: meanwhile home construction declined in october more than expected. the number of permits for single family homes dropped to the lowest level in nearly 2 1/2 years as the cost of higher
labor and materials being passed on to the consumer. the cause, the parts, on construction and new supply is another affordability hurdle for homebuyers across the country. what we're seeing in those, you know, 100 grand cities where prices are so high and mortgage rates are high 45 of those across the country. that's up from 16 last year. cheryl, you can see what is going on in that marketplace. things have changed dramatically quickly. cheryl: they changed within the last five months to be specific there, gerri, that's a great point. gerri willis thank you very much for that. let's bring in surevest ceo rob luna. i want to start with your thoughts on the housing market. mortgage rates recorded the biggest weekly drop since '81. if the american dream buying a home is still @teenable, let's add mortgage applications did rise for the first time in seven weeks. your reaction? >> when you look just what happened in the last two years, cheryl, we saw 45% increase in
home prices but we've actually seen a 57% increase in the payment. so just like what you were saying, home affordability is really lock ad lot of people out of there. so while we're getting up and getting stretched already, the short-term burst in interest rates will keep a lot of people out. let's also remember though, a lot of people that were locked in at these lower rates, they will be a little bit hesitant to put things on the market that being said while we're expecting there to be a 10 to 15% pullback, it will not be the crash that a lot of people are talking about we saw in in '08 ' 09. cheryl: are we in housing recession, do you think? >> we're in a typical recession right now. maybe mild, call it what you want but if you look at just past recessions the stock market always leads. cheryl, as you saw the stock market started going down november of last year. we're now starting to see real estate prices decline. seeing zillow, first time in
three years seeing price cuts out there. days on the market are a little bit longer so yes, definitely things are going to come down especially in the higher end. we're telling our clients out there, do not chase. you have ways to go. if you put an offer in right now, 10 to 15% below what offer is. you need to give yourself a buffer. we're definitely not done going down on real estate prices here. cheryl: spring of 2023 is what we're talking about. you tweeted you're asked about stocks versus real estate. so am i. >> yeah. cheryl: you say with stocks right now, look, buy low, sell high, whether stocks or real estate. start with real estate. if it is buy low, sell high, is spring 23 when well finally see housing prices really fall substantially? everybody is looking for that bottom. i know you can't time real estate, you can't time stocks but everybody is looking for that bottom right now. >> yeah. i mean absolutely. that is why we're sighing if you put an offer in, you need to put
in 10, 15% below. in any market, cheryl, whether cryptocurrency, real estate, stocks, investors psychology is very, very powerful. so in my opinion sellers are still not realistic. they will get more realistic into the first quarter of next year. you are going to see that into the second half of next year. that is where you see the big price cuts when they are realizing yesterday's price is not today's price. so be very selective there. as i said, stocks have been going down for years. stocks have decline, 50, 60% in a lot of names. so that is where you want to be buying. the real economy just started going down. real estate just started going down. that is the die -- coy cot my, especially younger investors why is the stocks going up when the economy is really bad. cheryl: give me the stocks you like. what are the top couple is it? the. >> old leader "faang" stocks the last two decades are done. that is not word you want to be.
you want to go into small cap names, farfetched, restoration hardware, fire. you can buy the etf right now, as a sector the small cap stocks it will be their time to shine. don't get too crazy trying to pick up crazy crypto stuff crashing. don't go into the safe stuff. cheryl: we'll have more crypto crashing. rob, good to see you, sir. >> thanks, cheryl. cheryl: you do want to make sure especially looking to buy, catch my show, called "american dream home." it airs wednesdays 9:00 p.m. eastern time here on fox business. on the next week's show, talking to tricia and chris. they are looking for a family farm. they want room for the five kids. the kids want to roam around. they want animals. two back-to-back episodes next week on fox business. it's a show i love. you know, it is your home. it means something, guys. coming up it is decision day for
twitter employees as elon musk issues an ultimatum. commit hardcore to twitter, you know what? take some severance. there is the door. we'll break all of this down for musk. also the tech layoffs continue to mount, hitting 120,000 this year alone. what does that mean for the labor market? i will going to ask ava adams coming up next. ♪.
understand that number does not account the difference between the tech employees we had back in 2001 and what we have now. we have five million tech employees in the dot-com bubble and now we have 8.3 million tech employees. that is a three million difference. so that report compares the dot-com bubble with what we have now without taking into consideration that we have many more people working in tech right now. so it is concerning to us but that's what we were expecting when the fed started tightening. that is what they want to see wage inflation will come down. that is actually not bad news. we can actually see it as good news when companies are decreasing the sg&a. at the same time, contain costs. it is not necessarily bad news for the market. cheryl: the market, no, i guess just for these people. i have to say there is a concern about the economy. if you start to see these, additional claims data, the jobs report, if that starts to show
that the labor market is softening, weakening, people are unemployment, you know, that is concern about overall spending. anyway, let's talk about amazon. so, there is a reports that in addition to layoffs amazon is offering voluntary buyouts to employees. have you heard that? >> yes. we, that's not a bad way to handle what is going on now. i think it is, it mitigates the risk of having what we're seeing now with twitter and back to your point before, it is certainly not good to layoffs when people need to work and what, we track entrepreneurs. what we do not want to see examples like elon musk that received 43% of what revenues tesla had last year as compensation. that is an excessive compensation. this year it is probably going to exceed that and the easy solution to that laying off people instead of decreasing
excessive amounts of compensation. to your point, i think examples like amazon or other companies that try to find alternatives are much better than what we saw with twitter and tesla. cheryl: okay. before i let you go i want to ask you about this, nvidia, micron, they both missing expectations. the outlook is really weak for the entire chip sector. are you forecasting more problems for the chip sector going forward? >> yes. and i think it is expected. so we have been expecting for a long time now to see a drop in semiconductor sales. to me it is bullish news for the markets the fact nvidia went up 43% in the last month but still after a weak report yesterday they're not crashing today. that is bullish news for tech. that is bullish news for entrepreneurial tech and semiconductor stocks. they have cornedder the data center market that will help them continue being a leader in the space regardless of the
macroeconomic conditions. cheryl: ava, thank you for being here. appreciate it. a lot covered. appreciate it. all right. we have a lot more coming up. a major shakeup for house democrats as nancy pelosi says she is stepping down from her leadership role. plus which stocks are going to get a boost from a divided government? and elon musk issuing an ultimatum to twitter staffers. go hardcore or go home. beverly hallberg applauds his move. she's here right after this. ♪. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq
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cheryl: it is decision time at twitter. elon musk giving twitter staffers an ultimatum, either commit to working long hours at high-intensity for the new quote, hardcore twitter, or, leave. with three months severance. the clock is ticking. employees have until 5:00 p.m. eastern time to decide. this is tough. joining me now district media group president beverly hallberg. beverly, i mean this is elon musk this is his style and he, he did do layoffs at tesla a few years pack and they were pretty harsh. a lot of broken hearts. he is going into twitter
slashing and burning what do you say? >> i'm not the only ceo who heard this and applauded elon musk for making this decision because quiet quit something a problem out there. people want their employees to work hard. my employees work hard. this is not a knock on them. elon musk is self-made billionaire. demands excellence in his staff. demanding in his staff because he wants a excellent product. cheryl: he is sleeping there. >> there is pushback with this hardcore rhetoric, talking about the long hours. i'm wondering if that is actually going to come to fruition or his way of figuring out who really wants to work hard to be part of twitter and who doesn't? we'll have to wait and see. one of his ways getting rid of what he views as a bloated staff. >> i go back to tesla. he did that at twitter. do you think other companies will follow? you think this quiet quitting phenomenon i think is ridiculous, by the way, do you think that will come to an end in corporations in general? >> i don't think we'll have the same elon musk style in the way they talk about it but when you see the layoffs happening at
some companies it is now an employer market, not an employee market. you have the difference as well where employees will look for good work. they're going to realize the employer is in the driver's seat. cheryl: big news i have to ask you about in washington. nancy pelosi says she will not seek a leadership position in this new congress but she is not leaving immediately. she will stay in her position. some would say that is it, she would retire. she is not. what do you make of her announcement today? >> i think we would have different announcement if democrats retained control of congress. as she handed over the gavel probably a good time to exit. when you look at the polling, saw so many young people, generation z coming out in droves pulling lever for democrats they need younger people. chuck schumer, joe biden, nancy pelosi combined it is up there. democrats would behoove them to get younger leadership members in there. i think it made sense at this time. cheryl: there is a little back and forth within the republicans
as well. they take control of the house. that is official. they have the 218 that they need. what would you say to party leaders? it was not a red wave. it was a little red puddle. not that they have decisive take no prisoners but they already do want to do hunter biden, joe biden, want to go afghanistan. all the investigations are ready to launch. is it too soon 24 hours after they took power maybe? >> kevin mccarthy would have a whole lot of leverage with the red wave. he is in one of those in charge making sure republicans get elected. that being said what republicans need more than anything to have the blockade to prevent any type of progressive policies coming from joe biden and the senate. also as you said those committee hearings. what we're really seeing a lot of negotiating going on behind the scenes between the house freedom caucus and also between mccarthy and other establishment figuring what are the rules going to be? we'll vote for you for speaker if you give us some rules we like to make sure you don't have too much power.
we'll know on january 3rd when the official vote is. we know mcconnell officially will stay in his role in the senate. that is already determined. cheryl: i will say seems like people are kind of, they're a little tired of all the drama and the tough rhett rich. i think voters are saying look, do things together. maybe a little bit par sawn at the end of day. we'll see. >> we can hope. cheryl: i will stay on the positive side of beverly, thank you very much. appreciate it. with the republicans retaking control of the house and democrats keeping the senate we're entering an era of divided government but that may not be a bad thing for stocks. joining me now, bulltick capital markets chief strategist kathryn rooney vera. great to have you here. what does political gridlock mean for wall street? >> hi, cheryl. gridlock is great for stocks because it is policies that move stocks, it is not, you know, politics or who is fighting with who, it is policies. if they're guaranteed or close
to guaranteed to stay steady and not being changed markets like security. so that is why seen a bit of a bounce in market after we saw divided control in congress and i think that's likely going to stay. the biggest movers going into next year are not politics. they're not policy. it is not gridlock. it is inflation and it is rates. cheryl: you know as we are indeed as you say it is a recessionary environment, high inflation, even if it has cooled off a little bit from these last reports we got over the last week are there stocks or sectors that you think will do well under divided government but also need to do well in the issues that i just laid out, which is what we're seeing in the economy? >> yeah. so historically the gridlock trade is not going to work this year, or for the foreseeable future because more than
dominating politics or even policies, chairman, i think is recession and rates, probably ending at five, 5 1/2%. we're talking about 30-year mortgages above 7%. car loans above 5%. so these are the issues that are going to weigh on corporate balance sheets and bottom lines as well as consumer sentiment. so stay defensive. stagflation is now. recession is next. so that means energy, utilities, staples, and health care. those are the places that are going to continue to outperform and have year-to-date. cheryl: real quick before i let you go, a lot of fed speak today, really it was james bullard hinting at more interest rate hikes this morning and that has been setting bond yields climbing. any chance of a soft landing? >> soft landing is really just hope and wishing. soft landing is unlikely to occur when you have inflation above 5%. as my former professor, nouriel roubini, inflation above 5%,
unemployment below 5%, very unlikely. historically impossible we get that but the funny thing, cheryl, the definition is changing. soft landing before was the fed succeeds bringing down inflation but we avoid recession. now it is becoming mild recession. cheryl: yeah. >> recession is part of the economic cycle. it is going to happen. unemployment is going to jump and that is going to hurt. cheryl: thank you very much, great to have you on the show. everybody, we'll be right back. ♪. if you think you have dupuytren's contracture, there's a simple test you can take—from anywhere. try to lay your hand flat against a surface. if you can't, you may have dupuytren's contracture. talk to a hand specialist about your options, including nonsurgical treatments.
proach, year am mo thkful f my . partilar, my other hn and my steelizabh. evenh ey live texas and i ve here issour we'vseen eh otr a lot isar. maratns to lf iromans to mneirthda, ere's beenomecl momes. theye bothreat pents, dedited ofessials and lovi spous. weheer eacother,e celeate ea other, and neveetsay a prer and raise a glass atamily nners. so i athankf to ca the aming humasiblin. all rit,harles pay will bebe back in tomorrow. liz claman, take a it away, madam. liz: i feel the same way. who needs friends when you have family? if you're lucky, it's great. thanks, cheryl. fox ma
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