jackie, gaffed you spread the message to everyone. i'm charles payne this is "making money." this is a push pull kind of a session. the answer i want to get to in this show what do buyers know and what do sellers fear? ed yardeni is breaking down the fear factor. the fed is expecting to stand pat tomorrow but could jay powell give us a glimmer of hope? the market is hoping for when the fomc wraps up. i will ask the market experts not only what they hear but how they expect the markets to react. consumer confidence hitting a five month low, financial conditions beginning to plunge. i rode a plane from orlando where there were three empty seats in first class. i ask joe lavorgna why the wall street thinks the consumer is strong. the solar climate movement is unmitigated disaster. it has caused people a lot of heart ache and it is unnecessary. i will explain. that and much more on "making money." ♪. charles: whistling past the graveyard, we all have heard of it right, to act or talk as if one is relaxed not afraid when one is actually afraid or nervous. all of the days for the market to exhibit some sort of a resolve today is kind of intriguing right? because we had this huge reflective bounce yesterday. it carried over a little bit this morning in the early part of the session. but when momentum stopped this morning we started to sell down, the sellers emerged it felt like selling was bouncing quickly. we know the bias has been to the downside, felt like maybe the session was down for the count. however major indices as you see on your screen are beginning to edge higher. 10 of 11 sectors in the s&p are up at the moment. are the smart money accumulating dips or are investors whistling past the graveyard? my first guest investors have been spooked since august. ed yardeni. ed, we know some things are afraid of real, some imagined. what are the real concerns that might be holding investors back right now? >> clear i let war in the middle east is a great concern. it is a horrible situation and it is an unpredictable one. usually in the past few crises that we've had they lasted just a few days a few weeks. there was a cease-fire, life kind of went on. this is not the situation we're seeing right now. the other issue that investors are very concerned about is a supply of treasury securities. we got announcement yesterday that the treasury is going to need something in the order of over 1 1/2 trillion dollars to raise in its auctions over the next six months and that's pretty spooky given that it is halloween. charles: so interesting because last week when treasury secretary janet yellen blamed higher interest rates on the strong economy, in fact sheep said the economy was so robust that it suggested we would be higher for longer i thought she was kind of giving us you know, the sort of heads up hey, when these numbers come out, when the next treasury auctions come out will have a t handle on it if you will. >> yes. charles: honestly i was kind of pleasantly surprised it was only 700 some odd billion dollars. that is how crazy it has been but could it mean we're close to the end of the bond rout? >> i think we are in a sense that the bond vigilantes if you will have been looking for some yield level at which there would be buyers and i think 5% is that level right now. i think we are settling down at that level. if we are, that would help the stock market a great deal t was interesting that the bond market really didn't react all that badly to the announcement that we saw yesterday from the treasury. let's see what happens on wednesday when the treasury gets more specific about how much of that they're going to want to raise in bonds and treasury bills. so that will be important. charles: obviously, yellen has taken a lot of criticism for not refinancing some other things. >> sure. charles: the duration issue will be key to your point. you know you had a great call this year. you said s&p 4600 when almost all of your colleagues were looking for a negative reaction. we got there. you warned viewers. we hit the target earlier than we thought. we'll see a pullback. how do you sense we'll finish this year? >> right now i think we're in the correction phase. i think we'll continue to move kind of around this level, to test this level for a while but then if things do, turn to some sort of stability in the middle east, whatever that means, it means hezbollah doesn't get involved and, we see that things settle down between israel and hamas, if that were to happen i think that would be less of an issue. charles: right. >> but, i think by the end of the year we could be moving back towards 4600. i'm not as optimistic we'll get back to that level. maybe something more like 4400 own santa claus rally. charles: right. before i let you go, it feels like at some point real soon there is going to be a big miss on the jobs report, a big miss on the pce, right? >> right. charles: and that to me you know will be something of a green light. just your thoughts what we might expect to see in that jobs report on friday? >> well, i'm a very big fan of watching the consumer confidence survey that comes out early own and it did come out today, showing that i'm sorry it came out yesterday, and i showed that there is still jobs plentiful, jobs are very plentiful. that series on jobs plentiful is highly correlated with job openings. initial unemployment claims are pretty close to 200,000. i think it will be another solid increase. i think consensus is 185,000. i have no problems with that number. charles: all right. hey, ed, thank you very much. always appreciate it. >> my pleasure. charles: folks coming up later my takeaway, this green push around the world, particularly europe and america it has been an unmitigated disaster. wish we could call a time out on it. my next guest says time to get defensive, alan boomer. you think the s&p could move 5% next 12 months but the risks are starting to grow. what are the risks? >> ed number one hit a lot on it he is brilliant. i read a lot of his research. the war is an issue. i'm looking at interest rates, when ratings go higher, it becomes a lot more expensive to do business. a lot more companies may be insulated from that because they locked in debt but some of that will come due. you need to go back to the marketplace, kind of to the u.s. treasury. charles: that so-called maturity wall could be a big problem beginning next year? >> absolutely. it is company by company. not every company has an issue. some companies have a bigger issue than others. >> i was reading your work, you mentioned four 1/2, settled 10-year around four 1/2, everyone is saying higher for longer, if the market could become accustomed to that, feels like an issue, velocity of the move, as much of the move itself. historically, you could say four 1/2 is the historic average. >> absolutely. it depends if your company needs that go to market to raise money or not. charles: i gotcha. what about the broad market? would four 1/2 be an issue or? >> it is an issue. charles: okay. >> you have to look company by company. broadly there will be half the companies that is an issue, maybe half the companies it is not but again higher rates are not good for stocks and in particular if you're in a company that is funding itself with debt, that's a problem for you. charles: right, right. of course it is really terrible for those unprofitable companies [laughter] >> absolutely. charles: maybe you know a lot of folks have been complaining like 40% of these zombie companies maybe they will flush them out and we'll get a pure market. i was checking out your stock screen and some of the things you're looking at stable earnings per share growth, low p-e multiples does that exist. is that a unicorn? >> not a unicorn. seven or eight stocks are driving the index higher there are a lot of companies trading low valuations but i would go a little deeper. how much debt do you have on the books relative to how much cash do you have? if you've got a low amount of debt and a lot of cash i think you're in a much better position to just you know, live throughout whatever happens next in the economy. charles: some of the names that are on your list include cisco, blackrock, baker hughes. let's talk about that for a moment. blackrock, is it performing the way you thought it would in this environment? do you see maybe underperformance creating a opportunity there? >> no. none of these stocks have look done great this year. charles: right. >> i'm a value investor. blackrock is one of those stocks folks move into money market funds folks will not do as well. as they get enticed into the market for stocks and bonds i think blackrock will be a good stockown. i would say their balance sheet is impeccable. charles: they're the number one aggregator of cash, everyone of their rivals, particularly on the mutual fund side, everyone is dumping mutual funds they're killing it there. on the bond side, maturities, short duration stuff one toe five-year stuff. you like munis and also government agencies. if someone is not familiar with the bond market but wanted to sleep a little better which one would you zero in on? >> really depends on your tax situation. if i'm a high-taxed person, someone makes a lot of money i might look at municipal bonds. i in particular look at general obligation bonds. these are obligations of cities and states backed about their ability to levy income taxes. those are safe places to put money. charles: right. >> if i'm not a high income earner i want just safety, i look at treasurys and government agencies. the yields are great. we're saying shorter term is one to five years but i would be willing to go out five years. i want to lock up some interest rates, right? i know that in two years or so, three years, rates should be lower but i want to lock in the yields today. charles: smart stuff, man. alan, you've been rocking. great to see you. always so many ideas, so many trends, so many things to discuss, never enough time. so i have got a few opinions too. i write a daily market commentary. it is chock-full of things i know you love. it is free. go to wstreet.com. it really helps for all folks watching. coming up could this be the best time to buy? remember, remember, the santa class rally officially began on october 27th. no one knows history of the market better than paul hickey and no one has been hotter than kip herriage. they're both here at 2:25. consumer confidence, financial conditions, things are looking so great in certain pockets of this economy. joe lavorgna has been warning us about this. he is here with his latest analysis next. analysis next. ♪ ., i promise to be the financial steward that you and your family need. i promise to put your long-term financial well-being above any short term transaction. everyone has a big picture. my job is to help you invest in yours. 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( ♪ ) the power goes out and we still have wifi to do our homework. and that's a good thing? great in my book! who are you? no power? no problem. introducing storm-ready wifi. now you can stay reliably connected through power outages with unlimited cellular data and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network. so... i know you and george were struggling with the possibility of having to move. how's that going? we found a way to make bathing safer with a kohler walk-in bath. a kohler walk-in bath provides a secure, spa-like bathing experience in the comfort of your own home. a kohler walk-in bath has one of the lowest step-ins of any walk-in bath for easy entry and exit. it features textured surfaces, convenient handrails for more stability, and a wide door for easier mobility. kohler® walk-in baths include two hydrotherapies— whirlpool jets and our patented bubblemassage to help soothe sore muscles in your feet, legs, and back. a kohler-certified installer will install everything quickly and conveniently in as little as a day. they made us feel completely comfortable in our home. and, yes, it's affordable. i wish we would have looked into it sooner. think i might look into one myself. stay in the home and life you've built for years to come. call... to receive $1,500 off your kohler® walk-in bath. and take advantage of our low monthly payment financing. charles: on january 30th, 2008 we learned the fourth quarter of 2007, that gdp number was 4.9%. we also learned later that the global financial crisis began in december of 2007. listen back then a lot of mavens were shaking their pom-poms saying how great the economy was even as we were in the midst of lurching in a very detruck sieve economic period. former white house chief economist, smb chief economist now joe lavorgna. i bring that up because the 4.9% gdp print we got which will probably be revised big time, of course some of the other data that comes out the overarching narrative on equal street that the consumer is strong, the economy is strong, can't be stopped. we've seen where those, at 4.9% we were lurching into a ugly, ugly recession. >> you could go even into '08 when people debated whether the economy was in recession. i remember after bear stearns was bought by jpmorgan people were arguing okay, the sacrificial firm had gotten taken under or taken over and risk was on and the economy was improving. the big difference though charles today, versus then, is twofold, the speed of interest rate hikes has been much more aggressive. 500 plus basis point hikes in a little over a year. back then it was 17 consecutive meetings, only 400 and a quarter basis points. moreover what we're seeing on the banking side real tightening in lending standards. not only credit is becoming expensive for u.s. households they're not getting as much of it. those are telltale signs why there should be a pullback in consumer spending. lastly if you look where excess spending is, not travel, hotels, restaurants, those places are crowded but not where the excess spending is, durable good spending is way above its long-term trend. if you get payback i expect that will take at least a point off gdp and more. charles: what explains that? supply chain hiccups? why would, goods were supposed to have faded away and all supposed to be about service spending to your point, taking trips, going to restaurant which had been relatively robust at least in the retail sales report? >> the services is now back to pre-covid trend, like you expect, looks like a v-shaped recovery, spending is way above trend. the answer is it takes time. part of it was supply driven. the fed moved rates so aggressively, was cheap and credit was american at thisful. these economies roll overturn down much quicker than consensus expects you showed in '07. it looks good, looks good, and you get the wiley coyote moment and it rolls over. auto rates, credit cards, personal loans, these are at multidecade highs. i find it hard to believe that will not hurt the consumer at some point. charles: it is anecdotal. caught a flight 9:00 from orlando, there were three empty seats in first class. it is anecdotal stuff. we hear how strong the consumer is. if you can't pack a plane going from orlando to new jersey, seems like a jell-o flag? >> labor market looks healthy. the problem real wages are negative. even though people have jobs -- charles: jpmorgan pointed that out as well again, what about these strikes, you know, the unions are winning? you know, the wage price spiral, is this going to spark a new wage price spiral? >> no, i don't believe so. in fact what is interesting the inflation data peaked shortly after the fed began raising rates. if the economy slows or goes into a recession, inflation will not be a problem or be the concern, only if the fed at that point maybe aggressively ease and keep rates low for a while, letting real rates stay negative as they did in the '70s, the fed isn't going to do that but i do expect these tighter credit conditions. the fact that households are paying student loan debt. there are a lot of factors. consumer confidence looked good, but michigan data was better for a lot of different reasons does not show the same robust, same strength and small business sentiment is terrible. small cap stocks -- at their lows -- charles: russell has been unmitigated disaster. it is supposed to be a proxy for the domestic economy. >> it is a proxy for small businesses for sure, charles. small businesses are the backbone of vibrancy of the labor market. labor market is not showing resillent. makes ask whether the data is as great as they are. even if they're the right data, doesn't mean the next quarter or quarter after will be as strong. gdp is not forward-looking but backward looking. >> there is something in the tea leaves we need to pay attention to. we're always happy to have you on. >> thank you, charles. charles: get to "money mail." really the best time hosting the show yesterday out of orlando, the money show. tom said excellent show. thanks for being honest about investing. charles, you're always silver lining in a dark clawed cloud, connect with real americans. lacking with the other media. old-timers and new innovative advisors as well. mark says i want to look as good as you do in those suits. mark, i appreciate it. thanks a lot. folks we love hearing anything about the show, any comments, anything that you observed you want to share. tweet me @cvpayne. all right, coming up, phil blancato is here. go with the stock picks, go with investments. forget about near term stuff. phil is here to make you money in the long term to share his ideas. kip herriage says this is the best buying opportunity he's seen since last october and he is going to share those ideas with you next. ♪. ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia. the chase ink business premier card is made for people like sam, who make- everyday products, designed smarter. like a smart coffee grinder, that orders fresh beans for you. oh, genius! for more breakthroughs like that- i need a breakthrough card. like ours! with 2.5% cash back on purchases of $5,000 or more. plus unlimited 2% cash back on all other purchases. and with greater spending potential, sam can keep making smart ideas- a brilliant reality! the ink business premier card from chase for business. make more of what's yours. ♪. charles: well my next guest borrow ad line from political strategist james carville saying that the market, well that it is geopolitical unrest, stupid. bring in bespoke investment group paul hickey. paul, i can never remember hearing you talk about geopolitics before? >> i think if you look at this past month the market for the whole year was following the typical seasonal patterns perfectly, right? even in the first few days of october you started to see the market coming back after august and september which are typically weak. charles: right. >> then you had you know october 7th, you had the hamas invasion of israel and the market has just be
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