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tv   Making Money With Charles Payne  FOX Business  December 1, 2022 2:00pm-3:00pm EST

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eligible, they can even help enroll you over the phone in a humana medicare advantage dual-eligible special needs plan. so, call now. better care begins with listening. humana. a more human way to healthcare. cheryl: right now the dow is on pace to snap a go day winning streak. fed member john williams telling edward lawrence inflation is too high. take a couple of years to meet that foal. i'm not sure the markets want to hear that. charles: i'm not sure i know what the markets want to hear these days, cheryl. we'll go into that. thanks a lot. good afternoon, folks.m charles. this is "making money." breaking right now, investors returning the early christmas gift from jerome powell
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yesterday. here is the thing, could the market wake up to a sobering reality your next act after runaway inflation could be deep recession? i have ed yardeni, kenny polcari, sarah count here to break down in the santa claus rally is real with the miracle on wall and broad. at the end of that freed sam bankman-fried, folks that paid $1000 to watch him in person game him a hearty ovation. maybe that is the crux of the problem. senator tommy tuberville here to react later in the hour. you need money and now, what happens when you are prohibited from accessing your own money? another cautionary tale you have to hear on "my take." that and much more on "making money". ♪. ♪ better watch out, better not
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cry, i'm telling you why, santa claus is coming to town ♪ charles: i think that is the dean martin version. i have to double-check that. these days christmas shopping every year seems to start earlier and earlier could the santa claus rally actually begun in october? here is the deal, folks. typically in december you get a little bounce like we had yesterday but the real santa claus rally doesn't begin until mid-month, mid-december. forover, this is usually the most wonderful time of the market. i have to tell you something, one of the reasons people are excited only once, only once going back to 1928 has december been the worst month of the year. that is a pretty good track record. that makes it jolly, you wanted to go out and party, right? remember, yesterday i talked about just how extreme the housing market is taking it on the chin because of the rate hikes. it is the worst we have ever seen housing reacting to the fed
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going on these rate hikes. guess what? same thing happened to the stock market, folks. look at this hit. this is the current hit. this is the rate hiking cycles. this is how the market reacted. only three times has it gone down, but never, never to the degree it has gone down. i suppose it is reflection of maybe a lot of things but certainly i don't think an efficient market, right? there is some bets here i think maybe the fed goes too far. joining me to just yardeni research president ed yardeni. ed i read you think the santa claus rally has already run, right? >> absolutely. i think we made a bottom on october 12 in the bear market. i think right now we're in a bull market. not a rip-roaring bull market. valuations are kind of high and there is still some issues with earnings up ahead here but all in all we started, santa class is back in town since october 12th. i think that continued yesterday. i think that will continue
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through the end of the year. charles: this morning we had a bunch of data just like yesterday, including better than expected income numbers, monster spending. here is the thing it came at the against of savings, ed. >> right. charles: 2.3%, one of the lowest savings rates ever, many already. >> correct. charles: meantime this is what the excess savings, right? that is starting to tumble like a rock. i look at the combination of things. i continue to feel like maybe the consumer on borrowed time. if so what does that mean for the fed? >> well i think this is an issue for next year, maybe the second half of next year once the excess savings are totally depleted but by then things can change. the labor market could remain relatively sound. most importantly i think wages are going to be rising faster than prices. we haven't had increases in real wages, wages have been stagnant as a result of inflation and i think by the second half of the
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year, that could be a source of income growth and consumption growth. so that is aways off. charles: right. >> for now it is what it is. excess savings are still there and they're still spending it. charles: they are still spending it, no doubt about that. we will spend money. that is an american trait that has ingone away. >> absolutely. charles: i had a meeting right after the open with our team. i come out of meeting. the market unchanged. i come out of the meeting the market is in freefall. all this data comes out that actually suggests the economy might be dropping faster than we thought. lower construction spending. >> right. charles: lower construction spending manufacturing plunge. ism contraction first time since may of 2020. prices paid, this is what we're supposed to want, 43 from 87. ed, could we actually be sobering up to reality that once we're done with inflation we have to deal with the recession? >> yeah. unfortunately the nature of your
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job and my job we just can't turn off the screen and kind of be long-term investors. we obviously react to the actions on a regular basis. yesterday the market looked pretty bad before powell turned less hawkish and, then we had this amazing rally. i don't think you should really focus on kind of the day-to-day, minute to minute kind of activity in the market. the bottom line is i think the economy is growing. i think it is remarkably resilient. consumers may spend less on goods. why you're seeing with the ism manufacturing weak but there is clearly going to the airports they're spending a lot more on services. construction, we've got a lot of weakness in single family homes, multifamily homes, that is absolutely booming. the capital spending caped h indicators are not really that bad. charles: right. >> i would describe the worst case as growth recession. soft landing call it. charles: soft landing. that turned the market around yesterday. the softish landing.
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>> correct. >> thanks, ed, appreciate it. >> sure. charles: bring in slatestone wealth chief market strategist kenny polcari. kenny, just in general, the last 24 hours we've been all over the place. what do you make of it? what is the market telling us? >> i think the market way overreacted yesterday. i don't think jay powell wanted reaction he saw. i think algorithms are tone deaf to what the message is. what did we hear? rates continue to go up, maybe at a slower pace. they will continue to go up until they find a level they think that is the right level, right? although we think it is 5.25, jimmy bullard said could be as high as 7%. i think what happened yesterday was more of a automated algorithm tape. you could say we had a supply chain issue on the sell side. they all disappeared and buyers were forced to pay up haphazardly and we're looking at that today as the dow backs off what i think was an overreaction to jay powell's commentary
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yesterday. charles: looking ahead to this jobs report tomorrow what are you expecting? >> so look, we look at yesterday's adp report which was lighter than expected, 127,000 jobs created, restored, however you want to talk about it versus 200 day expected. i expect tomorrow's number could be a little bit light. actually the fed would welcome a lighter number than a stronger number, right? a lighter number would suggest maybe these rate hikes are in fact starting to really take hold in the broader part of the economy. a number that will be stronger will only embolden the fed to have to remain vigilant and to remain in the aggressive path that they're on, right? maybe it goes beyond march. look if we have a rate hike next week like we're going to have, then one in january, then one in mare and inflation is still not responding we're going to get one in april, may and june, trust me. it is not going to stop if inflation is not responding at all. charles: right. >> we've had six rate hikes.
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cpi go from 9.1, to 7.8, six rate hikes to get down 1.3 percentage points. what will it take to get all the way down to two they say? charles: that is interesting. you talk about the number is weaker tomorrow. i looked tomorrow at all this weak data and the market tumbles on that. is there a point the numbers can get too weak at this point or whatever it takes to get the fed to stop, it doesn't matter? >> i think it is early for the numbers to get too weak. at some point the numbers if they remain really weak or get weaker that becomes a problem i don't think right now the number can be too weak. quite honestly i think jay powell and fed would like to sea a weak number that would play to his narrative the rate hikes are starting to work and starting to see it. they need to see unemployment go up. he all but said it. all but said it. the only way that happens if economy starts to slow enough we see less job creation and more
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layoffs. i hate to say it like that, that ultimately will be the way it has to be. charles: i know you're buying more amazon and home depot, i saw in your note crowdstrike. >> crowdstrike. charles: full disclosure i have subscribers in it. i thought that drubbing yesterday was out of this world, golly. missed by a penny or so. >> it was ridiculous! it was ridiculous! charles: scares the hell out of you a stock goes down 20% because the company missed by a penny, gave so so guidance? it wasn't even the worst guidance in the world. >> to be honest they're a key player in the space. it is all about cyber security, security in the cloud and all that stuff that is not going away. i think the ceo of crowdstrike yesterday was cautious. i think he was overly cautious. i don't see global customers pulling back on cybersecurity at all with the threats like china, rush sharks north trying to come after us at all. i think the reaction was way overdone. it is trading 117. now up 4%.
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trading at 122. i think it is a screaming buy down there. like you, like your subscribers i think a huge opportunity at crowdstrike. charles: i guess only thing, we'll add the cautionary tale it ain't for faint of heart. can be a little bit volatile. all i'm saying. kenny, thanks a lot my friend. >> always a pleasure. charles: want to bring in cleo capital managing director sara kuntz. here is a question, sara, did jay powell give us a early christmas present and why are we giving it back today? >> like the advent calendars everybody buys and powell gave us a little early christmas present. people kind of lost their minds. they looked up, wait we will get rate hikes but be smaller. we still have a boatload of problems. there will not be cuts anytime soon and i think the market today reflect as little bit of a holiday hangover from yesterday. charles: so you've been cautiously pessimistic. i'm making this term up but i feel like it might describe how
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you have been with this market. you found some ideas but overall saying be cool, wait, it is still not time. are you still in that camp? >> you know i am watching the numbers carefully. you know you see guidance like morgan stanley they still see a massive drop to company even this december, last month of the year. they have been right a lot this year. i'm certainly not discounting that. i look at names and i look booking holdings. reality is people are traveling this holiday. people are planning travel into 23, even with inflation and rising prices of hotels and air fare, people are still planning to travel. some of those kinds of names i remain excited about. charles: right. >> will i go out after anything that moves? no way. charles: i just had this conversation a moment ago with ed yardeni about the consumer. we see now savings rate 2.3%. we do see a precipitous drop in the so-called excessive savings.
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the vast majority of bottom half of incomes has been gone a long time. overall can the consumer carry this economy beyond the yolo kind of stuff? >> it is scary when you look at the amount of you know, credit card debt that is increasing. you look at amount of people using buy now, pay later, companies like affirm for spending this holiday. the reality is average american consumer not in a good place financially. it hasn't been for a long time. i don't see we're going to see the middle class help us spend our way out of the potential recession. with all the pressure to drive down wages that hurts the little guy. you know, i think that we need to find a resolution for that problem. charles: well the resolution will not come anytime soon. we get the jobs report tomorrow. we had initial jobless claims. continuing claims at 1.6 million.
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linked in said job openings drop the precipitously. i do want your thoughts what we might see tomorrow with the jobs report and your reaction? >> plural of anecdotes is not data. we've seen layoffs happening. i don't think we'll see a strong market in high quality, high paying jobs where they need for a while. america still needs a lot of truck drivers. charles: we do. we haven't had a lot in a long time. adp, manufacturing down 100,000. that is where i'm going first. i'm zeroing in on that. to your point it is great when the leisure hospitality jobs come back. they're the lowest paying in this country. sarah, thanks so much. appreciate it. folks coming up the audacity of sam bankman-fried. we'll discuss it with steve forbes and senator tommy tuberville. the ftx founder in that interesting interview he had yesterday. by the way he won't stop talking. 2:35 we hit that.
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grab a pen and pad. we'll go back to chart school. we're on the cusp of a monumental break out. if it works it could be huge. if it doesn't, oh. we'll be right back. ♪ nexium 24hr prevents heartburn acid for twice as long as pepcid. get all-day and all-night heartburn acid prevention with just one pill a day. choose acid prevention. choose nexium. the all-electric 2023 chevy bolt euv. 247 miles of range on a full charge.
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♪. charles: all right, folks, don't look now but we are back at a major inflection point. you know what i'm talking about. that 200-day moving average. it has been a formidable test. not only derailing this summer's rally but take a look at history. it derailed the rally back in 2000, 2002. that bear market, you see the red line. it derailed the rally back in 2007 and 2008. should i say rally attempt. hit that red line and dropped like a rock. but when this hurdle is cleared, i got to tell you history shows it could be the ultimate buy signal, the train leaving the station. check this out, we have 13 bear markets going back to like 1953. 12 times we crossed that 200-day moving average. we had 12 rallies 13 times, average 1%. the best was 36%.
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only once went down, that was in 2002 by joining me head of technical analysis at oppenheimer. ari, if we clear the hurdle where do you think the s&p could be a year from now? >> yeah. to start with the charts that you first put on the screen comparing now to 2007, and the pest in 2001 as well the point internal conditions are much stronger now than they were then. so the rally above the 200-day average, we're talking about it, it is important, it is an incation of invery mean tall trend improvement but confirming the market bottom conditions already been at play. we had washed out conditions in the summer, a successful test of the low in june and now we're seeing a reversal in trend. if that was consistent with the end of a bear cycle i'm thinking now in terms of a new bull cycle. if you look back in history,
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start of a new bull cycle, 40% rise over a 12 month period, consistent, conservative, reasonable. as i think about the next 12 months i'm thinking a term of the test of pryer highs for the s&p 500 as we think of back end of 2023. charles: as you were talking i almost went back to grab my pom-poms. don't get me too excited okay? we have history. i want to ask you about bonds in a minute. say we fail. does that mean we go back down to retest the lows again? >> well it is how we fall. if we start -- the big part again, it is about what is happening underneath the surface. there was a lot of stocks made higher lows in october and already started to reverse their downtrends f we're starting to see a failure here in downside participation expand that would be worrisome. if we don't push through here right now it might be a question
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of doing it at a later time as long as internal breadth remains steady, small caps hold firm, industrials, financials, these key areas of the market we've seen notable improvement in recent months. charles: great stuff. i'm glad you explained that. we talk a lot on the show about the internals. there is a lot that goes into this obviously because that is an amazing point because i think that is one of the trends no one talks about. i got less than a minute to go. everyone predicates on 10-year yield. it looks like a key support point here. what are you seeing with this 10-year yield? could it start to even break down further? >> it could. i think that rise in the 10-year, it is slowing, it is not ending. i would argue that it was the pace of the rise that pressured equity markets through the first half of the year. following that november cpi print, the 10-year broke a very steep uptrend line. i think that moderation is
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allowing the long duration assets and growth stocks to find their footing, in terms of the overall equity market. i think transitioning to a range now. we are coming into that 3 1/2% level. that was the prior peak, very often prior resistance becomes support. charles: right. >> if you fall below there, that 200 day average doesn't come in until 3.05%. generally speaking it is not high rate, not low rates, it is stable rates and i think we'll see stable rates now coincide with a stronger equity market backdrop. charles: so we're looking at it here. anything under here i think, listen, maybe it is wishful thinking to say 2.8, 2.7 but certainly this has been a lot of relief. ari, we always learn so much with you. thank you so much my friend for helping us out with chart school today. >> thanks, charles. take care. charles: a day after jerome powell gave, let's call it a glimmer of hope, john williams and others have been more cautious, but john williams
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speaking exclusively to fox business. take a listen. >> we have to be data dependent. we have to be driven how the economy is performing and how we best get to the 2% inflation goal. >> possibly more rate hikes in the future, maybe a step down in december? charles: i'm getting reaction from federated hermes cio right after that, right after this. we'll be right back. ♪.
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charles: so here's so something that you really don't hear anymore, at least not in the market. stocks are down on bad news, bad economic news. that is exactly what happened. a slew of data hit the wire at 9:45. i talked about it earlier right? ism manufacturing data at 49. the u.s. manufacturing prices, they were down to 43. the employment index got hammered pretty good. manufacturing the new order part
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of it down to 47.2. u.s. construction spending down .3 of a percent, a little worse than wall street. all of these were below consensus. all are at levels we haven't seen the beginning of the covid-19 pandemic. maybe that softish may not happen after all? i want to bring in federated hermes cio. steven, you say in 2023, we should brace for a rocky landing. tell me what that looks like vis-a-vis a soft landing. >> it is all in the eye of the beholder, charles, but rocky landing is our forecast for gdp next year, is roughly zero, slightly negative. with one quarter to the other bouncing around zero. i think in a rocky landing enthusiasm will go, at times feel like a soft landing. other times it will feel like a hard landing. so the market is going to go
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from the fed's overdone it or the fed has underdone it, inflation is under control, inflation is not under control. it is a difficult environment to manage through, we're advising folks, this will not be the end of the world. we don't think there is a financial crisis coming, could be wrong. the system seems pretty sound. charles: right. >> the economy in parts is still pretty sound. we have earnings a lot lower than where they are now. that is one of our biggest concerns about the market in general, particularly the growth side of the market even today you saw it again with sales force. you will have expectations have to adjust downward there. so we're recommending play defense here, stay in more conservative stocks, well-diversified, solid businesses, maybe not growing the lights out but moving along fine and paying a healthy dividend. if you can wait a year with five or 6%, that will be a good outcome. charles: sounds like a seriously emotional, a serious, wild,
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emotional roller coaster for 5% but you can take what you can take. i do like the title of the piece you had out yesterday, to be or not to v is not the question. the reason i'm asking in those other scenarios the central banks are able to come to the rescue, at this particular time it feels like the central banks are creating whatever crisis or problems we may have next year, this is their own handiwork? >> it is their own handiwork, charles, starting way too late, now trying to play catch-up. they're not in position, everyone is trained over the last 15 years, expect a v a v-shaped economy after the fed policy. everyone trying to outguess the fed when they will start cutting rates like crazy. that is not the outlook. it is higher for longer on rates. no fed rescue coming. work through with solid companies. don't look for some heroic out
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come here. charles: steven, you referenced shakespeare, hamlet, investors remain resilient, and confident. why confident? i have less than a minute to go. why will we remain confidence in this rocky landing scenario? >> one confident in whatever strategy you've chosen because it is an environment charles, where you can easily get whipsawed if you're not careful. confident in your strategy. we would say conservative. remember over the long haul the economy does recover and keep growing and companies participate in that. stay invested but, just, avoid getting whipsawed in this environment. it will be very, very easy to do that. charles: right. i think that is the right message right now particularly for a lot of new investors this is the first period of difficulty they have encountered. some have already thrown in the towel. i'm glad they're watching right now, steve. we have to leave it there. thank you very much, my friend. appreciate. >> thank you charles. charles: coming up chinese state media using tiktok, we know
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that, but they're zeroed in on republicans. why we're not getting a lot of movement against pushing back in d.c.? i will ask senator tommy tuberville on that. also sam bankman-fried getting a round of applause from the audience at "the new york times" event. you know who is not clapping? steve forbes. wait until you hear his reaction. he is here in studio next. ♪. at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect. hi, i'm jason and i've lost 202 pounds on golo. for me as a veteran, it transitioned from active duty service to the civilian community, it brought out a lot of stress.
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the audience clapped, some even stood. take a look. >> sam, i know this has been a difficult conversation and a tough conversation and i on behalf of everybody here, on behalf of the public i want to thank you for engaging in it at a time in truth when i know you've been advised not to. thank you so very, very much. [applause] >> thank you. charles: joining me now forbes media chairman, editor-in-chief steve forbes. steve, listen, i dedicated this, protect them, encourage them to get into the stock market. you're seen sort of a pillar of the markets. your family has a long history of helping people and, you know, reach the american dream. in many ways this sam bankman-fried thing is sort of an indictment on the entire industry, i just want your opinion, your thoughts, your perspective what's happening here? >> well to say that should mean investors should leave the market, not get in the market, say that a horrific automobile
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crash means we shouldn't have automobiles. what you try to do is dissect what happened, what did you miss? we at "forbes" didn't hit on him but investors, institutional investors had access to the data. had access to what we don't have as journalists missed a thing. why didn't they see it? as an outsider it is harder to see it. so you go over it but the thing you remember you always will get bubbles. you remember the bubble in the late 1990s about high-tech. charles: right. >> went through a terrible crash. then came back again. charles: is this the golden age of fraud bubble? >> no, we had bubbles before. go back to the 1920s. go back to the0's. american express was nearly done in because they miscalculation on lending to some kind of oil. these things always happen. the thing is, it doesn't mean you abandon it. you find out what didn't we see and try to do it better next
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time but it is going, human beings are going to get caught up in these things. charles: what about then the folks who should have seen it, sequoias of the world, raised money twice for sam bankman-fried? once at 25 billion. they have access to books. they understand better than anyone how to do due diligence. my fear they will continue to allow these to happen because there is always a way to off-load this on the general public. >> in terms of ftx i'm surprised he went before the audience yesterday and the audience clapped him like bernie madoff, absolute fraud. that should be, he should be ultimately if they find out it look like what he did he should be brought before the bar of justice and brought back from the bahamas. charles: what about the vcs that gave him the stamp approval? >> they got caught on the hype. even though there wasn't much there now. charles: i'm watching this dude -- >> there was going to be a great future. >> i don't know what the appeal
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was. i did read the article, one of the articles going back to may in forms, 29-year-old crypto billionaire skyrocketed to cult status. this thing does feed on itself. the media gets behind it as well but the media to your point doesn't have access to the balance sheet which was nonexistent. before i let you go, steve the future of crypto? >> crypto will be there after a huge shakeout just like silicon valley was there after what happened in the late 1990s. what i think you will see rise up is finally the stable coins, not the ones we have now that didn't have the assets they said they had but when it is done right that will be a form of using money. cryptos are not money because they're not stable in value. charles: right. >> which is why it was not vetted in the first place. so the feds will try to regulate it out of existence but the thing is going to be there. it will take paths we can't foresee now just as no 1:30 years ago foresaw the rise of the internet would do, especially to publications like
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ours. charles: go over my time, austan goolsbee, the president of the chicago fed. [laughter]. i can't even say it with a straight face. i like austan but golly, not for that job. >> goes to show the need for overhaul of the federal reserve. starting with the fact you don't fight inflation by making people poorer. do it by stablizing the dollar. charles: amen. thank you so much, steve. >> charles, appreciate it. charles: joining me now alabama senator tommy tuberville. back in may you introduced the financial freedom act for 401(k)s. part was to allow folks to invest in cryptocurrencies. do you still think that would be a good idea? >> well the federal government shouldn't be allowed to tell you what or who to invest in, number one. now you have to do your due diligence. this is a bad time to talk about this bill after ftx just pulled the plug on crypto for a few weeks but it will come back. we had the hearing, it went
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good. financial freedom act you have the ability to earn your money put your money where you want to put it to get the most out of it. charles: ironically i think this is the perfect time to talk about it because even in the face of all of this i think your point is valid and this is what needs to be articulated. people need to be allowed to take risk. i think regulators should do better jobs in helping more with full disclosure. that is on the government, right? that is not on the individual investor. >> exactly right. due diligence first, charles, you know that, as steve forbes just says, we don't need to regulate the heck out of this. we need to regulate it to the point where we get people opportunity to see this is what they want to do. charles: right. >> crypto will be here. it is not going anywhere. startups will fall by the wayside, ftx over the next few weeks. it will gain its balance. it will get back on track. we need to do that. charles: let me ask you about tim cook, down meeting with key gop members as the republicans take over the house. you know is being more and more
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described as a bully within his industry. really taking, doing some really things that have harmed shareholder value, things that harmed competition. republicans have talked a pretty good game. will he be able to sweet talk these folks into not doing anything? >> i hope not, i hope not. we have to hold the line. tim cook has a big stick. he does but he does a lot of work and, he has got a lot of infiltration into china. who is our biggest adversary by the way. charles: yeah. >> we need to make sure that we do our due diligence, as you just said as republicans to make sure we do the right thing, but this guy has as i said has a big stick. we have to make sure we keep our eyes on the ball. charles: he has the biggest stick out there. ticktock, talking about china. bring up ticktock, i'm hearing on both sides of the aisle that they are a legitimate threat. that china is spying on americans, they're accumulating information, and disseminating false information and mostly against republicans.
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apparently it has been found out they have put out so much misinformation about your party. is there any chance that something can be done about tiktok? >> well, they're going to attack us every day. trump was right. get rid of it. do as much as we can to make sure we tell people it is a national security threat. if you got it, get rid of it. these young kids are going to do it. it is entertainment for them. they can track anything you can do. we need to understand the possibilities what china can do. it is headquartered in china. they get anything they want. charles: it is addictive. i'm not on it. my friend sent me links, 15 minutes later oh, i forgot i had to go to work. i got 30 seconds, this rail strike is looming large. there are not enough votes right now, there are not 60 votes. where do you stand on it? are you going to vote to, to put a pause on this strike? do you know yet?
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do you think, do you think they will be able to get it through? >> we have three votes. i just voted on the first one which was dan sullivan's bill from alaska to extend the time, 60 more days so we get this worked out. the next vote will be to approve or not approve what they have already come up with, the bill that is at hand. charles: right. >> the third vote today will be to to extend seven or eight more days of sick leave. i will vote yes for the second one. i will not vote to extend it. if they have extend it getting together to do it on their own. that is not for congress to decide. charles: on the sick leave part? >> that is the seven more days of sick leave. they have got a lot of of sick leave as they speak. they have seven more days. we shouldn't be able to sit down to do that that's management, people that work with them, to work that out. but, you know, they have already worked part of it out. we can't let these people go on
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strike, charles, you know that. it would be absolutely terrible. charles: two billion dollars a day. chlorine, medicines, you name it. they are saying they don't have any sick leave. we have to leave it there. senator, thank you very much. senator tuberville. appreciate it. >> thank you. charles: coming up my takeaway on the latest cautionary tale you have to have access to your money. not letting some firm keep it from you. first oil expert -- exports surged last week to all-time high. that is another reason why we should probably let the business and the industry flurish. i will ask david bahnsen his thoughts. he's next. if you used shipgo this whole thing
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♪. charles: so yesterday the market rejoiced on a toned down jay powell but on second thought why was he so you know, why was he not as angry as he had been before and more willing to talk about this sort of step-down process? remember the fomc press conference he was a lot more angry. nevertheless wall street pretty happy. talking about maybe the next rate hike being 50 basis points, only 25, one more 25. in factual street still believes that we can get rate cuts at some point next year. i want to bring in from the bahnsen group, the managing director david bahnsen.
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wall street modeling the sort of step down scenario. 50, two 25 basis point twats. i think you're looking at some point next year for a pause too, right? >> i am and i don't necessarily have a strong opinion when they start cutting but i have a strong opinion about the pause. i think the futures market you're referring to might be overdoing it. i would not be surprised if they end up do one 25 hike at the beginning of '23 and stopping from there. either way the dot plots, fed's own prediction has been the worst prediction over the last 10, 25 years what the fed will do. that will be the case as well. >> i don't even look at that think more and want to get rid of it. powell intimated that they will not pause in the past. i don't want to be arthur burns, i want to be paul volcker. that is what concerns me.
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he acknowledges the lag effect and pounding away because he has drawn a line in the sand. do you like that at all? >> i don't like that he says it. i don't think we should do monetary policy by historical comparison with events themselves are not comparable. the fed helped create inflation and housing but the fed had nothing to do with chinese supply chain issues breaking down. anyone looking at the inflation data can see much of it is coming down and it has nothing to do with trying to put millions of people out of work. the problem is an economic principle that is wrong, phillips curve. the tradeoff on employment and inflation. it has been wrong since the '70s, it is wrong now. economic growth is not inflationary. charles: that is interesting because i thought they were moving away from the phillips curve for a while there. let me ask you about the market itself. you've been focused on the dividend ideas. they have done extremely well, everyone is piling in, if the fed steps away would that make
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equities, riskier ideas more appealing? >> you know, that is a great question. i do suspect that you could end up seeing the market start to believe that sentiment would improve. so it wouldn't so much be that sentiment is improving but people are betting on sentiment improving, front running what they think might happen in growth. no, charles, i really believe these are decade-long stories, that a rotation from growth to value, value to growth is not a one or two year deal. fundamentally, people will not be coming back in to 100 times revenue companies and to 50 and 70 times earnings companies. they will want reasonable valuations. then you can make some money. that happened after the dot-com. the great companies that performed well out of the nasdaq implosion, they first had to do what? rebuild free cash flow. right now you not only have a valuation deterioration in the expensive parts of the market but you have a fundamental deterioration which is why you
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see job layoffs and all the other thing going on in silicon valley. charles: back to the fundamentals still avoid the hype. david, thank you so much, my friend. appreciate it. all right, folks, we'll be right back. ♪. ...
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visit to book your free consultation. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit charles: so let's talk about a cautionary tale, and it goes
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back really far, but more recently to that debacle at robinhood, i'm sure you remember when they took away the buy button, and it was removed when investors were trying to get their money. all of a sudden more recently folks went to the ftx website. you can't get on. it doesn't exist anymore. well this morning there's news that blackstone, one of the biggest, strongest, most power powerful, richest companies in the world is limiting the amount of redemptions from holders of its massive real estate fund. now apparently there's been a major rush to redeem money. i mean the housing market and real estate market is starting to implode so there's 1.8 billion in october, 1.3 billion last month. it's $125 billion fund, folks. it's concentrated in rental housing, industrial, hospitality , and look, the occupation levels are high. 98%, 94%, 100%, so really it feels odd. still, management seems to be in trouble. they just sold a major stake in
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mgm grand and mandalay bay in las vegas so what they said is redemptions are capped at three-tenths of 1% of the funds net assets. that's nothing. this fund, by the way, hasselberg been limited high net worth investors so maybe there's a sense it's why it's not a general panic or you aren't hearing outrage at least not yet but it's a cautionary tale. it's another reason to learn a lot more about the market and certainly have more control over your cash. i mean, by all means, hire expert, put your money in different funds but you got to have where with all but nothing worse than needing your money and it's locked up somewhere. always remember that. we learned it the hard way with bernie madoff. don't learn it the hard way in your life, right, liz? liz: i know there's a spread between ftx and blackstone, but that is -- charles: bottom line is if someone needs their money right now they can't get it. liz: i don't like that idea. thank you so much.


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