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tv   Making Money With Charles Payne  FOX Business  January 6, 2023 2:00pm-3:00pm EST

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fully accounted for the political costs of this type of opposition. neil: remember, that group, they each won their district, to a man or woman, by double digits. they had a comfortable lead. so i'm not saying anyone's bulletproof -- >> right. neil: -- but they might be voter-proof. >> that could be the case. i'm not really sure how close the elections were. did slow berg really win by that much? neil: no, she did not. you're quite right. >> i wonder, this could come back to haunt them. neil: i questioned your economic view, and you quite properly went after me -- touche. this is what's going to play out in the house. guys, i want to thank you very, very much. markets having a fine i'm of this, i think, as both these gentlemen pointed out, focusing on far, far bigger things, but right now close to being resolved in the house. to you, charles. charles: neil, thank you very much, my friend, and happy new year once again.
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i'm charles payne, this is "making money," and breaking right now, a rally on wall street. investors cheering the notion the fed may stop its agenda of disruption sooner rather than later. so we saw wage growth come in much lower than anticipate thed, people are coming back to the labor force, that's always a good, and the service economy is in contraction. the big question, of course, is that, you know, is this the turn that a lot of people have been waiting for? i've got ed car. denny, nancy davis all on deck to start the a block, break down this data and the fed reaction. also the stock of the day, wwe is soaring because vince mcmahon is coming back, but could there be one more boomerang boss? if i'll ask donna jane, and -- jonna jane. -- john najarian. judy shelton on deck also to weigh in on the central bank becoming omnipotent in power and discretion. plus,s don't miss my takeaway on
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how we've gone to not having to work as a birthright. all that and so much more on "making money." ♪ ♪ charles: all right, folks, make it nine times. i'm not talking about kevin mccarthy, i'm talking about nine times in a row the jobs report has come in better than expected. so that extended an already record-shattering achievement. listen, 223,000 people in december made new net jobs, better than 200,000 consensus. but look at that trend, it's drifting lower and lower. and i think there are a number of reasons for this number always beating the street, right? goes back and forth to the big misses in november and december of 2021. look how off the experts were. i also believe we are set up every time to beat the street with the so-called jobs number, a strong jobs number. be that as it may, we get the
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knee-jerk reactions. the reaction today the saw the market moving higher. turns out that's because there's some key developments, right, that are the really high on the fed's radar. first and foremost, wages. monthly wages for november, they were revised to up four-tenths of a percent. initially the read was six-tenths. and yearly wage growth for last month came in at 4.6%. that's the lowest since august of 2021. participation, that actually inched higher, 62.3 from 62 the.2. so the civilian labor force is getting bigger, right? 439,000, that's not a lot of people, but they came back into the job market, and that's's what powell wants because here's the equation, folks: the more people that a return to the jobs market, the easier it is for employers to offer smaller wage increases, and that will go toward bringing down inflation. despite these two nugget, that opening rally which was huge at the beginning faded pretty quickly. let's call it muscle memory, right? a lot of times these days we
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feel like any rally should be sold. you've herald the term -- heard the term sell the risk. but then came more proof that the fed is beginning to work. the ism service report for december was an unmitigated disaster. it came in at 49.6, it missed the consensus of 55 by a mile, and we slipped into contraction for the paris time since may of 2020. -- can first time. right, above 50 is expansion. so you take this along with the regional fed sector survey ises we've seen recently, the pmi number, and clearly the economy, the sweet spot of the economy, the service economy, is moving at a slower rate. in fact, it's starting to move down at a faster pace. so when that news came out, we shifted once again to the upside and, of course, all eyes now on the bond market. you want to see what bond yields are doing and watch what the street thinks about the fed funds. 10-year yield down at least 4%, approaching that key support point of 3.4%.
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keep that in mind. i think we go below there, we can really rally bigtime in stocks. you remember questioned when the cme fed watch was modeling for the rate to go to 5.25? now it's back down to 5%, and also that first rate cut, yesterday the seat thought it would happen in december, if you look here, it happens in november, a month earlier. so the question now is does this, data, all of this data a i just went through, and the market's reaction to it, is the possibility of a soft landing back? i want to bring in ed yardeni. you're looking well, my friend. i heard you were a little under the weather. it's good to see you and happy new year. >> thank you. charles: i know you have been modeling for a 60% chance of a soft landing, i got a feeling more people might join you on that. is the probability even higher now? >> i'm going to leave it at 60
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soft landing, 20% hard landing. i'm not going to tweak it, but it certainly gives more credibility to the idea of a soft landing. if you just focus on the payroll employment numbers, if you just focus on the household measure which was up over 700,000 and, as you said, the labor force was up, there's no landing in the employment numbers where things are moderating, as you said, is in the service sector which has been one of the sources of inflation that the fed wants to see moderate. and then the wage numbers were very much in a moderation mode. so you put it all together, and it sure looks like a soft landing overall and no land aring in the labor market when it comes to getting jobs. charles: and yet you have also remarked recently that stock market bulls have a narrow path to victory year. >> right. charles: so what does that mean? what are the obstacles? it sounds to me a soft landing would be really good for the
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bulls. >> yeah, yeah. well, today's numbers say that that narrow path hasn't shut down. it might have widened a little bit. and the narrow path idea is that, you know, if the economy's too weak, then the pessimists will say, see, we told you so, we're in a recession. earnings are going to collapse, the stock market's going to take a dive again. if the economy's too strong, then the pessimists will say, well, the fed's just going to have to raise interest rates a lot more, and that'll cause a recession, and that'll continue the bear market in stocks. that a narrow path requires that inflation comes down while economic growth kind of continues. and i think that's what we're seeing. charles: ed, you've gone against the grain many times in your career and even more so recently. but i did get your call on earnings growth. if i read this correctly, up 11%. i mean, people are saying up 5% is nuts, so 11% you're really
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going against the crowd here, aren't you? >> yeah, absolutely. yeah, one of my accountants said i seem to be the only one among strategists actually looking for an increase in earnings this year, and that's because i don't see a recession. i think there's a lot of strategists who are basically in the recession camp, and if you look at their forecast for the stock market, it's basically flat. but at the same time, they tell you that earnings are going to be down. there's no way the stock market is going to be flat and not down if earnings are actually going to take a recession dive. and i just don't think that's going to happen. i've been calling this a rolling recession, a mid-cycle slowdown, a growth recession, and that's what i think it still is. charles: and i've got to tell you, i agree with you. by the way, i love it when everybody thinks earnings -- bring 'em on down, the estimates, you're just going to make it much better for those who are positioned when they come out. again -- go ahead -- >> thank you.
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thanks very much. charles: you look great, my man, and happy new year. it's always a pleasure to see you. >> thank you. charles: my next guest following this morning's jobs report, kpmg's chief economist, diane swan. how was this jobs report in that sense just right? >> well, it isn't exactly just right, because goldie lock ares is only in fairy tales, and it's odd for me to be more pessimistic than ed yardeni. i've. moan ed many years, but i'm a little -- i've known ed many years but i'm a little more pessimistic than him. pleasure not only did job growth slow, but the good news is we did see the increase, the decrease in unemployment, increase in labor force participation, and that was really good news, to see more workers throwing their hat in the ring, participating in the labor market and the unemployment rate fall with a cooling of wage gains. the cooling of wage gains wasn't completely across the board, we actually saw leisure and
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hospitality pick up which is kind of interesting when you compare and contrast it with the services contraction. it is also interesting that in this month's jobs report we had a record december number of people who are out on vacation and not at work. and that's despite the contraction in services. and i think what you're seeing is there's the revenge travel going on out there, and there are still people out there that are trying to get the travel although a lot of them didn't get to where with they wanted to get during the holiday season. it's a delineation from where corporate america is into from where households are. a lot of people are traveling for leisure travel, but we have seen a pullback, and we're still not back to the levels we were on business travel. charles: i think a lot of that's being able to work from home. i drive in to the city every day, and no one's coming in on fridays. and i think a lot of people between you and i, diane, wink-wink, who are working at home, yeah, home is cabo, right? [laughter] it's a beach somewhere.
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but it's reflected -- >> well, i have to disagree, charles, because -- i've got to push back on you. i've been home for over two years, three years now, and i don't get into the office very often. and i went through 11 surgeries, and i never stopped working. ten days after a double mastectomy and reconstruction surgery, so i don't believe that, and i, my colleagues who work with me, you know, i work kind of hard, but -- charles: no, i believe you. i'm not trying to ache mig away from you -- take nick away from you. i think you're one of the best for many reasons including your integrity, but i'm telling you, if you listen to airline ceos like united airlines and hotel operators, a lot of people who told their the boss they were at work, they may be working, but they're working on, you know, these trips that you just described in the jobs report. there was something you wrote that's very intriguing, that the job openings may have peaked. and i bring this up because we
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had another jolts report that sort of scared the market a little bit. can you walk me through that? i don't have a lot of time, but i think that's very pivotal. >> yeah. we really did some digging on this, and it's really interesting. job openings and labor turnover surveys showed 10.5 million job openings at the end of november, 50% ahead of the pace that we saw in february of 2020. it's just stunning when the labor force hasn't grown at all between february of 2020 and december of 2022 that on the margin demand for workers is that much higher. we correlated it with the high performing businesses, businesses that want to hire. these are high quality business formations, and that step-up we've seen since to -- since 2020 the was really big. but with higher rates, venture capital funds have dry canned up, and credit is drying up. and that that new business formation that hire more workers is also likely to slow quite dramatically as we go into 2023. charles: i love that kind of unique thinking.
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listen, i'm a bigger fan of you now than ever, and i've always been a big fan. happy new year, diane. thank you so much. >> you too. charles: all right, folks. no matter what you're investing in, no matter what, i don't care if it's the antique cars, stock market bonds, all your modeling begins with the fed guessing game. but don't fret because the fed is also playing that game. i want to bring in quadratic capital founder cio nancy davis. yesterday we had the st. louis fed, they released bullard's presentation, and the prospects for disinflation in 2023. so considering this morning's data the, what are you looking at? inflation? deflation? disinflation? stagflation? something else? >> well, definitely the stagflationary outcome would be the worst for the u.s. consumer, also for financial portfolios. that's sort of the environment where you have higher prices at lower growth. i think investors really need to be prepared for all environments. we have a deflation etf if as well as an inflation etf because
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i think both are risks to investors' portfolios, and it's not, you don't want to pick a side especially if you're, say, on the deflation camp. you could have your whole portfolio positioned to growth stocks, towards techie things, and you should probably have some inflation protection in there just in case you're wrong with everything else. so i think both sides have a place in investors' portfolios, and it's the important to not be making this like a trade. add -- at the end end of the day, inflation is the thief in the night and if you're not working and you're retired, you have even more risk because you not going to benefit from any if kind of wage inflation. charles: from -- and i like the idea what you're saying because, you know, you actually read my mind, what my follow-up question was going to be. but if we're looking out for the best opportunities here, i mean, have you been able to single out, consider what may have some really crazy moves this year with respect to the economy, have you been able to single out what you might think is the best opportunity for 2023?
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>> well, thanks, charles, for asking. i do think having exposure to the yield curve normalizing, i think, is one of the most unique opportunities. that's to what our etf does, it gives you exposure to inflation-protected bonds and the normalization of the yield curve. the curve is steepening today on the jobs report, but it's still not normal. for instanceing the treasury curve is inverted by 70 basis points, the swaps curve, which is a more global and unfunded market that's, you know, for all global investors around the world, it's much bigger than treasury market, that's negative 1.05% today. it's not normal, and there are very few things that you can buy in the financial markets today that are trading at below 1980s valuations. so the swap data started in the late '80s, and it's never been more inverted than right now. so i think it's really compelling because you can have either the fed pivoting if we
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had a recession like so many, you know, i love having the contrarians on your show, but most of wall street thinks we're going to be in a recession. so the recession pivot could steepen the curve, or we could have a more risk-on environment where investors rush back out of treasuries and sell long-dated bonds, or it could also be from quantitative tightening with the fed raising their balance sheet. so i think there are a lot of possibilities, and i do think that's pretty compelling. charles charles love that. i have not heard that idea yet, and i think it's extraordinary. happy new year, nancy, thanks a lot. >> happy new year, charles. thank you. charles: coming up, it seems like chairman powell is really trying to do with the fed put, least that's what some people are saying. tweet me if you think the fed will really walk away if from helping out the stock market. i don't believe it. i can't wait to see what judy shelton says about it. also speculation growing that jeff bezos may be coming back to amazon.
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charles: as mentioned, the jobs and ism numbers are keeping the peak of volatility in place, for options players it's wonderful, right? it's like nirvana, a chance to make a lot of money, joining me now, jon najarian. last year the s&p moved 1% or more 48% of the time. 92% of the time the market saw more new lows than highs. if so, you know, it was a perfect opportunity the, a perfect backdrop for people buying options. do you see that continuing this year and, if so, you know, what's the best way to go about taking advantage? >> oh, i absolutely do, charles. and even though options did exactly as you said and the market moves were extraordinary, it was just with a very small growth rate for options versus what they normally do. in other words, over the past
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three years we had averaged about 50% growth per year in options trading. last year it was only about 5%. so, obviously, significantly slowed. and i think that was because investors were a little off kilter as far as what was going on with the rapid up and down movements in the market. i think after the fed finishes what they're gonna do -- i'm not saying we go right to a rate-cutting environment, charles, but when the fed finishes with these rate increases, i think you'll see volumes surge yet again many options. but right now there's so much uncertainty. we're down 200 one minute, we're up 400 the next -- charles: right. >> that doesn't -- that's good for traders, it's not good for investors. charles: right. but it's also good for options players as well though, right? i mean, specifically. so -- >> yes. charles: -- today, the stock of the day is wwe.
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vince mcmahon coming back to the company, up at least 22%. so i'm looking at the options -- [laughter] and this is why people love options. some of these january calls up 3,000%. i mean, golly. so now i've got to ask you because there's a lot of scuttling butt that jeff bezos may be coming back to amazon. i'm looking at, well, if wwe, these options are up, what would be a good option that i would love to be in, understanding it would be very risky, if bezos were to come back in the next month or two? >> well, there's a lot of speculative the paper right now because amazon is both down big, the opposite of wwe. the wwe had a little bit of a break, if you will, in december. but it's been, like, from the lower left to the upper right for the last two years. even when mcmahon stepped away for a while since ther? but -- since the summer. but as far as amazon, people have been willing to speculate,
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and they've been burned as the stock continued to drop. now, charles, we're seeing people speculate at the 90 strike out in march and april as well as the 100 strike. that's with amazon trading at about 85. so those appear to be the recent wents -- bets that maybe bezos will do what schultz did over at starbucks and what iger did over at disney, and that is come back and put some, basically, new focus on the company. charles: yeah. >> and jeff may not be the guy that is responsible for it falling like it has, but certainly if jeff came back, you would see, i believe, 20 the-25% pop out of that stock almost immediately. pleasure. charles: and those 100 calls, they'd probably be up a how percent or more. and, you know, before -- i know we don't do a lot of this open speculation on show, but, you know, when you think about
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someone like schultz who more or less starbucks was his baby, vince mcmahon, wwe is his baby, amazon is jeff bezos' baby. i know he's having a lot of fun, he's got a new girlfriend, but, you know, his baby's in trouble. he may have to put all of that on hold, that's all i'm saying. i don't tout takeover rumors at all, but if there was one to believe, this would be it. happy new year, jon, thank you so much, my friend. >> to you as well, charles. charles: jay powell, folks, getting fed up with the idea of the fed put. so there's really a staggering evaluation that he's also against all valuation, speculation that we're talking about, but, you know, here's the problem though, they helped create a lot of this. so they might be between a rock and a hard place. i've got judy shelton coming up to discuss that and also why it might be better to work on your poke per face than your economics degree if you want to work on wall street, speaking of gambling. we'll be right back.
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charles: all right, so the market is up pretty nicely, in fact. some of that's the fed, some of that's the cp effect. [laughter] most of it's the fed, right? the rapid deterioration with our economy, people are cheering it because it seems to be the only way to get the central bank to print money at lower rates. but some smart fed watchers believe jay powell wants to take fed out of that game for good. i'm going to bring in senior fellow judy shelton. judy, i want to start with the notion of the fed dismantling the economy. i got an e-mail from the economic policy institute today saying that the fed is taking the wrong approach, that it was focused on commentators saying that the fed, you know, is causing pain and ended up with this particular line saying
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there's no compelling case that american families would be better off if the fed damaged the job market in the name of fighting inflation. besides, shouldn't the goal of economic policy be to avoid pain? your thoughts on that. >> well, i think when fed's official strategy is to try to raise the interest rate to a level sufficiently restrictive to cause growth to be lore than it would otherwise be -- lower than it would otherwise be and cause more people to be out of work than would otherwise be the case, then automatically we're saying that the fed wants suboptimal results in terms of prosperity for people. but, of course, the fed would justify that in the name of fighting inflation and say that it's worth the pain. charles: yeah, it's a tough one, right? a lot of people on main street do not get it. they don't understand this thing that was created in 1913 with the promise of smoothing out the business cycles. no more booms and busts, right? that's all we've had since then,
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and here they are actively -- i mean, all day long since the data this morning you've had at least three fed officials, just a moment ago bos wick, saying we've got to get over 5 president. it's got to strangle the economy, and people are saying the data's telling you we're heading that way anyway. and i can see why anyone would be frustrate thed. and, of course, the other side of the spectrum is the so-called put, right? the fed put where the federal reserve comes to the rescue of the market. it really began, i guess, in earnest under alan greenspan. many are saying that that powell wants to get rid of that. do you believe that? >> well, i think you're already going to the heart of the issue, charles, which is do we think the fed is in charge of the economy. it's really a wag the dog situation when you hear that we're at record unemployment, and the first thought people have this morning at 8:30 is how is fed going to respond to that. pleasure and, to me, it's really
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sad. you would think that we've learned by now that you get better results when you let market forces determine outcomes. charles: yeah. >> but instead we've kind of gome to this idea that a small committee knows better what the cost of capital should be and whether they should raise or lower it to stimulate the economy or to restrain the economy instead of just allowing market participants to determine through price signaling what should be the cost of capital. i don't know how the fed can even imagine whether it's being restrictive when it really doesn't know what the market rate would be -- charles: right. >> -- if we allowed that to determine the price of capital. charles: jude judy, central banks have been gobbling up all the gold they can get, right? and gold is breaking out. what's going on there? i can't get an answer from -- i haven't gotten a great answer from anyone yet. i think you can help me here. >> well, i think what we're seeing is a geopolitical
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development where china, russia, turkey, these countries are trying to get around having to pay using collars, having the dollar are -- dollars, having the dollar be the mechanism currency as a global reserve currency. and china has set up in shanghai and hong kong exchanges where you can convert oil-denominated contracts that use the rnb into gold futures contracts. now, that a's not the same as a gold-backed currency for china, but they're trying to make it very convenient to immediately make oil deliveries. and saudi arabia might also be interested in, make oil deliveries convertible into something other than the dollar for payment back to the provider. charles: wow, wow. now, that's very compelling stuff. judy, great having you on. i appreciate you always. happy new year. thank you. >> happy new year, charles, thanks. charles: see you soon. after valuations -- active
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valuations were off the chain, we mow that. we're talking trillions of dollars in free money and, of course, trillions from the if white house. and yet some people say there's still too much access out there. take a look at this headline from last week after spacex raised $750 million to value the company, are you ready? drum roll, $137 billion. i want to bring in sarah do you wants right now -- sarah counterright now. the article says that nuts. i don't know if it's tongue in cheek they're saying the fed should jack up rates 10% right now. what is the correlation between free money, the fed if policy -- fed policy and really what's been a great time for private markets until recently? >> i mean, everything's related, right? and the reality is that because interest rates were low for so long, a lot of people couldn't make any money in, you know, things like bonds. and so they looked at the private markets and, you know, the cost of lending was so low that these companies were able to both borrow a bunch of
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venture debt as well as, you know, invest, raise a ton of equity dollars. and often, you know, they raised that money to pay, you know, to sell their own equity, and they're putting money directly in their pockets, right? these private company ceos and executives. so there's been a lot of that, and it certainly has started to slow down, but you have companies like spacex that are doing something pretty novel, right? there's real revenue there. you know, they did the about $3 billion in revenue, you know, last year -- charles: right. >> $3 billion in revenue and a $147 billion valuation is a crazy multiple, but people think there's room to you, and way -- they want to get in as early as they can. charles: it's easy to get in now if you think at some point they'll ip to -- ipo at a crazier valuation because the unsuspecting public will be like, oh, spacex, yeah, i want to own that, and buy the stock and it's never at that price
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again. let me fast forward to an area where i saw something, i think it was yesterday or the day before. microsoft's ceo expressed a lot of excitement about india, and i know you're excited about it as well. how can the average investor make money, let's say, okay, really what's happening in the most populist democracy, a lot of people think that's the hidden gem out there. >> yeah. i mean, you look at the bric countries, brazil, russia, india, china, there's really only one of those you want to touch for most people, and that's india. one thing to look at is what companies can you already buy into that are big will. so, certainly, microsoft is doubling down and reaffirming that commitment, and, you know, you have countries like -- companies like even meta where, you know, india's actually the country that has the highest usage of facebook. and so, you know, it's almost three times the usage in the u.s. and so, you know, there are companies in the u.s. that are doing great business in india, and it's a business-friendly climate especially compared to
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sort of the chaos that that we're seeing around the rest of the world right now. chair. charles: sarah, thank you so much. happy new year, my friend. appreciate it. all right, folks, corporate insiders tend to tell the story the when to buy and sell the market, right? so the question is, you know, if they're not buying, why should you be buying? i'll ask rob luna, scott martin that. the also is it better to be a good gambler or have an economics degree to really succeed in this market? well, the stock pros now. also sven's coming up, we're going to break down what history can tell us about what the fed is doing and will they ever change their tone or blow it once again? we'll be right back. ♪ ♪ so to help you remember that liberty mutual customizes your home insurance, here's a little number you'll never forget. ♪customize and save♪ only pay for what you need. ♪liberty liberty liberty♪ ♪liberty♪
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just a moment of your time, everyone! singlecare, the app that truly helps you save on your meds. is that... yeah, he's here every day. do you use singlecare? no, i have insurance. oh, singlecare can actually beat your co-pay. singlecare can also beat the price of your medicare plan. you mean our medicare plan? damn you too much sun! you just search your prescription in the singlecare app, show your coupon to your pharmacist... best of all, singlecare is free to use. marty it's time to go. i have a story to tell! check the singlecare price today! charles: all right, folks, believe it or not, the market is in rally mode, but it's probably not going to sit too well with the fed which is really spreading rhetoric, rhetorical
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fear, so much. along with the most aggressive rate-hiking cycle ever, it's been a heck of a one-two punch. i want to bring many northman trader founder sven, you posted this week, i said in 2021, i said it in 2022 and i say it again now, the fed is the biggest danger to markets and the economy. now causing a recession to fix their mistakes. and consumers get to pay for it all, yet people are arguing about politicians. i agree with everything you just said, but people say what can they do about it. >> there is not much you can do do about it. obviously, none of us have any control, we have no input into who the elected -- our unelected officials are. and, unfortunately, we have to sit lu their policy mistakes. -- through their policy mistakes. they've made big blunders in the past couple of years, now they're sticking to a new script which is higher for longer.
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so first we got the inflation, now we get the increased cost to carry. so what we all need to do is carefully navigate through end game what the perception of the market is in terms of how the fed thinks. it's not an easy exercise. charles: it's not. we have to look through the eyes of the fed knowing that they're looking at flawed data. they're intelligent people, they know it's flawed, and that's the part that makes me so upset. and then, you know, today already you've got all these fed officials who are rallying around saying, hey, hold your horses, you know? bostick saying we've got to be above 5% because it's got to grip the economy. so it makes you think that they're going to go too far. >> well, that's the danger that hay embarked themselves on a course -- they embark themselves on a course, and they don't deviate from it no matter what the data is. that's how we ended up with money printing when cpi was still already way above 7% as opposed to, you know, their 2% inflation target in general. they let the horses out of the
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barn. and now, for the life of me i can't figure out whey -- why they put out in the minutes this week that there's not going to be any rate cuts whatsoever in 2023 without mowing what the data is -- knowing that the data is. the danger is that they lock themselves again into a box where if inflation data comes down dramatically, which is what i expect this summer, they will be completely out of sync with what their stated policy target is. charles: yeah. it's absolutely remarkable. if you're data-dependent, they're saying heavy got a peak at the data for the next 10 months, 11 months. so you mentioned it earlier in this segment, i want to wrap up with sort of, how are you navigating lu this? how can the viewers navigate through this which is really frustrating? >> it is, you know, the markets tend -- frustrate the maximum amount of the people the ma'am mum amount of the the time. we use technicals, and these technicals tell us still at this
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point despite all the weakness that that a we've seen here over christmas and to the beginning of this new year is that the uptrends are still the holding. a lot of these key tech stocks, while they made new low like tesla, apple, amazon, they made new lows and positive divergences, as far as i can see from that perspective as long as inflation data comes in better than expected and it's challenging the fed in terms of its positioning, you have potential to see a nice rally still. but watch out this year. if we're for some reason see these uptrends break, then you have downside risks on s&p to new lows. and, unfortunately, how this all plays out into the send of -- the end of the year is really dependent on whether the fed sticks to its hawkish narrative or not. because i can tell you 5% plus and carb carry coming out with 5.4%, those are levels of 2007 with. how well did that work out,
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right? this is a much more, an economy much more sensitive to higher rates. so they're playing with fire with continuing to stick on this really hawkish path. and i think, ultimately, the way this can turn out bullish is if they flip-flop if inflation comes down hard. charles: no, it's a touchdowner -- powder keg. is if i'm pretty sure, you're talking about this long-term sector trend still intact. sven, happy new year, my friend. always appreciate your wisdom. thank you. >> thanks, charles. happy new year to you too. charles: coming up, my takeaway on really the impact of financial engineering by the government and the federal reserve. but first, we've bot the trading bros, rob luna and scott martin who really are long-term investing pros. but, poker, is it better to be great at poker or understand economics? they're next. ♪ ♪ the internet is telling me a million different ways i should be trading. look!
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>> i guess they forgot what a coiled spring looks like, charles. i love fact, man, we're getting all these dire predictions about earnings, a big recession coming, fed going to 10% on fed funds. mine, those are the kinds of things concern i mean, those are the kinds of things that get predicted in times of '08, '01, '94, and they don't happen. these predictions that come out especially after a data point with the nonfarm payroll and things like that, charles, show you that the market is so poised to actually go up, it wants to go up. we just get a little scoch of good news. and i think we're starting to see that, man. charles: and, rob, to that point, you can get oversold. a good stock can be overbought, a poor market conditions can be oversold. so i believe that coiled spring hinge is going to work year as well. >> yeah, i agree with scott. and as you know, charles, i mean, one of the major movers of markets over a long period of time is psychology can, and it's very interesting to see we're getting some bad news.
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there's been a couple of days now year, although it's very early, where we definitely could have sold off. we would have just a few weeks ago, but the market seems to me like it's looking for a reason to rally, and if you could put together a few days like that, fear turns into fomo, and we could actually start to see a rally here. charles: let's talk about dogs of the dow. i haven't hit that this week with any quest. it's the like the names in the dow jones industrial average with the highest yield, and that's usually because stocks have gone down the most. it worked last year bigtime. either one of you guys buying into any of these dogs? will this dog hunt, in other words? okay, i'll take that as a no. [laughter] >> i'll tell you what, charles, that's a really great play -- yeah, that just tells you everything. look at stuff like intel, charles, some of the tech stocks. the nonvalue stocks on the dow, those are the stocks i'd start putting free money or free cash
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because the ones in there already, the yield plays like chevron and some of the other value plays in the dow, i think that stuff has already played out, and you've got to go for the stuff that was your dog. charles: listen, i do love the dividend plays with some of those dogs of the dow. let me switch gears here, because i just saw a great article that a said that skill is better for investing success, and if you really want to distill the need, it's poker rather than economics. you buying into that at all, rob? >> well, look, you know, i was reading that article myself, charles, and what they're saying is for newer investors, you really need strategy, intelligence and all to those things. but when they look at the professional investor, that really didn't play much. it was really hose poker type of skills. when you think of that in sports, you have to be fast, strong and you accelerate. but when you get into college, the nfl, everybody's at that a level. it's the same with investing. once you learn the basics, it really comes down to what we
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just talked about, psychology. how can you read that other person's hand, how do you have that steady hand in a quarter like last year when you probably should have been buying some stocks in december that, you know, take some profits on them now. charles: 20 seconds, scott. i know you're one hell of a blackjack player, but what about the market? [laughter] >> yeah, playing a lot of baccarat too these days. that's 19 more seconds than i need. i've been keeping a poker face all week because i've been buying tesla here. and actually now hanks to the rally today, boy boys and girls, we're up on the name. you've got to buy trash sometimes when things don't look so good. ing. charles: talk about rolling the dice, rob, scott, happy new year. thanks a lot, folks. we'll be right back. >> thanks, charles. pleasure nothing. but for a young homeowner becoming their parents, it's a learning opportunity. come on in. [ chuckles ] the more, the merrier. paris, huh? bonjour!
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charles: so we had a lot of conversations today about the federal reserve and their efforts at financial engineering. you know, at a time when every business seems understaffed, the fed is trying to increase unemployment. of course, you have to ask why this predicament exists in the first place. well, that's a different kind of financial engineering. that's by our government, the federal government. at the top of the list, of course, they're trying to vote buy, but it's also morphed into something different because it's the always existed. now it's sort of a notion of free money as a right. take a look at this local ad, 1928 presidential campaign suggested that herbert hoover
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would provide a chicken in every pot and two cars in every garage. we've come a long ways since then, and it's taking a toll on our ability to create opportunities. in fact, those opportunities are the foundation of american greatness. people do not want to work because they do not have to work. labor participation is down dramatically across the board. take a look at this, 16 to 19-year-olds used to go out and buy their own stuff, their own video games. from a 46% participation rate 20 year years ago to less than 38% now. there will be costs beyond the runaway inflation that we've had to deal with since 2032. 2032. free money is expensive, and for the nation it means forgetting how to to work, forgetting how to succeed, forgetting how to pull ourselves up by the boot strap thes. although there's a group of people who remember that, and they're at ces right now with liz claman. over to you. liz: they sure do. that is a great point, charles, because a lot of these companies began at start-ups, and they needed to borrow moneyan

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