Way, jackie. Good afternoon, folks, im charles payne, this is making money. Breaking right now, stocks stumbled out of the gate. Here is the thing it is litany of issues. Surging bond yields. Wait until you hear what happened with the 20 year auction. Political tensions enhancing. Negative reaction to earnings this morning. Guess what . Im actually bullish. I will share my source of optimism and my one key signal to load up. Heavyweights tesla, netflix report after the bell. Well handicap that with you our top analysts on on the street ad our favorite stockpickers. President biden heading home after the wartime visit in israel. Tensions escalate after a bombing in gaza hospital. Russias Vladmir Putin touts a new world order with his quote dear friend president xi. Gordon chang is here saying what the two leaders are saying is something we ought to be paying attention to no matter what else is in the news. All that and much more on making money. Charles all right, so most people know me as a rosecolored glasses kind of guy. Be honest with you it upsets a whole lot of people who say im a permabear. I admit im always bullish on america and looking for opportunities in the market. Doesnt mean im always completely long. I say i am champing at the bit to become aggressive here however there are some reasons, i will share some with you, not necessarily order of importance but you heard us talk about this a lot on the show, seasonality worked like to perfection this year. Historically where we are right now. A little bit of choppiness still to go but setting up perfectly for a yearend rally again if seasonality works out. By the way more important in a election year, third year of a president ial election. Were at this point if history proves right we are going to be off to the races. There are some other things people are concerned about, we have a lot of guests who always come on the show to talk about this, thats the earnings. Forward pe ratios i would look at that before past trailing 12 month pe ratios, coming down a little bit. Here is the magnificent seven. 34 times, 27 times. 493 stocks 18 times down to 16 times this right here is reasonable. I really of all the things in my decisionmaking process this is way down on the list but lets face it hundreds of billions of dollars go to work based off this number. Guess what . Most of these people missed the rally this year. They have to be a way to get in, that will be the excuse or opportunity no matter how you look at it. You have to talk about the earnings part. Third quarter right now well be reporting. Talk about the magnificent seven. Why do they have such high pes . Maybe they justify it. Look at what their earnings will probably be. Rest of market here. Here is the most important thing, were coming out of the earnings recession, it has been seven quarters i think. It will be pretty significant for a long time. This is the good news. You can see here where you start to get the rest of the market up near the magnificent seven. Maybe we get sort of scenario with the same tide lifts all ships. Then of course probably the most important thing, should be the most important thing there was a time when the fed didnt come before Everything Else but it does now. This is where we are right now with respect to where the fed is, where fed funds are. Looks like we will stay this according to the cme fed watch, maybe get our first rate cut in july of next year. I could live with that, i could live with that. I call that dry powder by the way. These are some things were looking at. Finally there is the wild card, when do you pull the trigger, right . When do you really want to get aggressive with all of this. One of the things that is going to happen. These are the money market funds, right now six trillion dollars, six trillion dollars, some of that eventually will come back to the stock market. Here is where i say maybe get really aggressive. Over 4400 you will see some buying. Over 4600 i think you got tonnage aggressive in the stock market. Joining me now, Wells Fargo Advisors svp mark smith. Mark, i laid out my bull case. Take some shots at it if you want. Charles, not a lot to disagree what you said. A lot of my clients are sitting in money market. Getting 5 rates plus. Es socially talking about the magnificent seven up 20 this year. Folks are saying im sitting on the sidelines, how do i get back in. You have to look at some of these tech stocks because they are really poised to break out. Charles you would stay with the tech names . Why not this showing tremendous growth still. Theyre, revenue is still coming in and i really dont see a reason why you want to own any of the magnificent seven next five, 10 years. Charles 2023 were kind of talking about earnings growth, then 2024 same thing. To your point all the way to even the Second Quarter of 2025 they will have outsized growth, earnings growth. This is what we based the market on before, before Everything Else, right . Investing 101, it is all about the mothers milk of markets is earnings and they have got them. Absolutely. Not to mention, listen value stocks, we talked about growth, theyre also poised to break out because they havent really moved a lot this year. Youre seeing low singledigit returns on the value side of things. If we see the financials take off, because typically when you see rates this high financials do very well. We havent seen that yet. If that breakings out and you start to see growth and value i agree with you charles on the financial side we had some pretty good earnings with the big banks for the most part. Some soso, i looked at top 10 age losers before i came down here, i saw a couple bank names Like Northern trust. You would still have to be very selective there . Absolutely. Regionals you saw coming into the beginning of this year took a huge hit. I really wouldnt be in small cap regional banks. I think large megacaps banks where you want to be because 6 all the ways they make money. Charles you like industrials. S p industrial index t was doing pretty well. Felt like you got all the fiscal programs out there that will pump all this money in. We see record breaking numbers on construction. All of sudden it started breaking down here. Is there, what is, what is your case for buying this and getting aggressive with these industrials . Well you pointed it out. Obviously the government is spending a ton of money on the infrastructure package got passed. Well start to see that kick in this coming year. Another reason why is the defensive stocks coming out. Youre seeing all these wars breaking out. That is in the industrial space. You see a. I. Being talked about all this year. You will need all these different Data Storage Centers a lot of reasons why you want to own industrials. I think it is a long story. Only started 3 yeartodate. Charles we can see were making a move through the 200day moving average. I mike the industrials too. Im overweight industrials, overweight materials as a counter to those tech names. Before i let you go, jay powell, you know, just six fed speaksers today starting at 12 noon. Jay powell tomorrow. What pru expecting . Listen they reiterated 2 target. Charles they didnt say when they had to get there, though. Do they have to bludgeon this economy to death . Do they realize between the lag effect and all the other things that happened can they let it happen. Can they let us get there when we get there . They got it wrong last year. I think theyre trying to make sure they dont get it wrong again. I think it is higher for longer, rates are going up. Charles you think they hike some more . I think so. If you look at the unemployment numbers, different growth numbers, energy will be moving up. Yeah i think you have to raise because theyre looking to target 2 . Got most of it right, mark. [laughter]. Hey, listen, one out of three that is not bad. Hall of fame. Charles not bad. Major League Baseball right there. Hey folks, look at this. These are two names looking after the close. They report, tesla, netflix. We have keith fitzgerald. He will break it down. Also the best media analyst on the street, laura martin is with us as well. So ive been talking about this economy for a while. Weve been talking about the stock market. Lets just talk about some things historically. Lets just say last october that was your low. Coming out of that bear market low the first year, this has been, really record breaking stuff. One of the lowest ever for the s p 500, only up 22 . There was only one year worse than that. Lower than that again. But some of these the worst ever for the russell, the worst ever. We hear talking about the worst ever for the new york composite. The worst ever. Dow jones transportation, one of the worst ever. The worst ever. S p financials, im sorry the financials, worst ever. The bank index itself, the worst ever. Coming out of this socalled first year of a, if it is a bull market, it has been pretty sloppy. So heres the question, is it a red flag or does it mean a chance to make even more money. I want to bring in Capital Management ceo, shana sissell. It has been a while. It has. Charles i know youre focused on this. Start at this end of the table, banks and financials, really sloppy, worst first year coming out after bear market ever. Is this a good thing or a bad thing. Im a little concerned. All the banks noted especially regional banks that rely more on lending activity there is no demand for lending because people dont want to pay the higher rates. Charles right. That is a major part of their earnings. So that is going to continue to weigh on the banks. I think if we see more certainty, where Interest Rates are, we know the fed is done we may see an increase in demand but until that point i think consumers are staying away from increasing debt levels. Charles russell 2000 small caps, everyone is wondering, so coming into the year, historically, coming out of these sort of economic environments, the russell lead, right . Almost. Charles last october, last december, last january, almost every guest said own the russell if you owned the russell youre trailing big time. Is this a buy situation or is this a red flag . I think this is a red flag. Nonearners in russell 2000 are at historic levels. So that for me is a red flag. I think there are some concerns there and i do think well have to see an earnings trough and im not sure were there yet. I think were too optimistic at 12 for 2024. We need to see an earnings trough. I think we need to see some economic softness before im in the russell. Charles the one thing i worry about the russell 2000, when the company is food enough they graduated. Yes. Charles they are saddled with higher rates. These companies will struggle when it comes time to refinance. Some of them may not be able to. Yes. Charles talking about the things you like here. Picked out some of the names at the top we got caterpillar. With a strong dollar doesnt that hurt them a little bit . I dont think so. As your previous guest pointed out we have infrastructure programs which caterpillar would be a huge beneficiary of. So caterpillar for me is a buy right now, whether or not they get business from china is not that important, given that they will have higher demand here. Charles i got a minute to go, get to another list, real quick, nvidia, rough sliding last couple sessions. Biden Administration Says no, you cant sell highend products in china s that an issue for you longer term . Would you hold the stock through this . I would hold the stock through this. As a matter of fact i would be a buyer on weakness. Very good company. Very strong balance sheet. Has more cash could pay off the debt tomorrow and still have tons of cash on the balance sheet. That is a wellrun company with no competition. I remain a buyer. Everyone gives me a hard time on this. Charles thats okay. I am too. Were in it together. Yeah. Charles 30 seconds to go why is this attractive investment at this time . I think fixed income will have volatility. If you have want a defensive positioning in your port goal on the downside, liquid alts will provide that. They will have that volatility. I think they will not provide the protection it mass in normal conditions. Great stuff. We covered a lot. Great seeing you again. You you too. Charles President Biden facing israel today. Facing what could be the biggest test of his presidency as tensions begin to rise. Dont forget about russia and china. They met also during this week. Wait until you hear the news coming out of there. We got rebecome can grant and gordon chang on that. It is a big day for earnings season. Laura martin will preview some of the big megacap names right after this. This is american infrastructure. Megawatts of power, rails and open road, and essential services of every kind. All running on countless invisible networks, making it a prime target for cyberattacks. But the same aipowered security that protects all of google also defends the systems running americas infrastructure. For these services. For the 336 million of us living here. In a world moving toward clean energy and electric transportation. The future is in Battery Metals. Ion energy is a driving force poised to support asias booming Battery Metals supply chain. Ion energy. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . Have we piqued your interest . You can get two unlimited lines for just 30 each a month. There are no Term Contracts or line activation fees. And you can bring your own device. Oh, and all on the most reliable 5g mobile network nationwide. Wireless that works for you. Its not just possible. Nice footwork. Its happening. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Charles well, netflix is one of the Big Companies reporting after the bell and history shows the stock could move up or down, in a big way joining me now needham and Company SeniorMedia Internet analyst laura martin. Laura, im reading your 13 page report, taking notes. I go back to the front, it strikes me, 52week trading range 200 to 405. That is nuts. What is going on with this company. It is a binary company. Were figuring out if stream something growing business. It stopped growing in the u. S. The Writers Strike is over with very large Cost Increases for labor. The actors are still out on strike. Were trying to figure out whether streaming deserves its multiples today. Charles it is so interesting you said that, i dont know if you can see the teleprompter, you read my next three questions. The pandemic though at one point everyone was saying streaming streaming streaming. Disney took back their movies, they went online. Everyone assumed they would be a winner. They enjoyed outsized gains. We knew they couldnt last forever. You can see Revenue Growth around the world looks pretty solid but when you start looking at things like revenue per company, those sort of things, revenue per user that flattens out. What happens in an industry like this . Is there some sort of consolidation . Or just some names just not make it . Yeah i think both. I think what is going to happen is, well get rebundling back into the linear tv ecosystem. What these streaming companies didnt anticipate, if you have a direct to consumer offering you have to have lots of data scientists figuring out how to drive growth up. Your Customer Acquisition cost goes through the roof, churn goes through the roof. There is zero growth in the u. S. Which is the highest rpu per month area. We need netflix bellwether for streaming is, did they grow subscribers specifically in the u. S. Which is the highest rpu region, grow subscribers at all . Or only adding subscribers in the rest of the world, 8 average subscription base, versus 16 average in mesh. In which case the economics is not as good with the subscriber brace which lowers invested return on capital. Charles speaking of economics about it, they all hiked up prices a lot from initial launches. Hulu, showing most hubris, showing 18 a month. Is the model being like stamps and cigarettes, even though you have dwindling audience keep hiking the prices, if that is the case would you continue to invest in Something Like that . I think it is a great point because we have this thing called streamflation. The average streaming service is raising prices 25 . Deloitte says on average households have four streaming services. The gap, the price increasing between cost of streaming between the cost of your linear tv bundle which has sports is closing really quickly. It is possible we get growth again in the linear tv ecosystem as these streaming Companies Come into comcast and spectrum bundles because the price is getting really high for these streamers. Charles i got 30 seconds to go. I have got disney, amazon, apple, those kind of questions. What is the most important thing youre looking and considering with this whole space right now . Churn, average net subscriber growth and average rpu. Those are the three things. I care about regions. Netflix, where is the subscription growth coming from, and what is happening with the average rpu. Charles laura, youre the best, thank you for coming on. My pleasure. Charles coming up the market is always looking at the fed and these fed speakers. It is a lot to keep up with today. No less than six are speaking. Of course Everyone Wants to know what jay powell has to say. He will speak tomorrow. Luke gromen will handicap all of that and what is happening in the middle east for investors. Well also speak with Rebecca Grant and what President Biden had to say today, why it is a highstakes visit to israel. She will join us and say why failure is not an option tourists tourists that turn into scientists. Tourist taking photos that are analyzed by ai. So researchers can help life underwater flourish. The new dexcom g7 sends your glucose numbers to your phone and watch, so you can always see where youre heading, without finger