"making money." breaking right now the markets as you can see are under pressure, turns out there is counter-force even more powerful than artificial intelligence. we're talking surging bond yields. phil blancato, piper sandler, michael kantrowitz are to start us off. what do endless shrimp at red lobster and janet yellen have in common? we might find out the hard way. tweet me. we're live at the courthouse with the very latest there and the impact on the election and potentially on the economy. you don't want to miss my takeaway on things getting even choppier and how to keep your head on a swivel but also stay cool at the same time. all that and so much more on "making money". ♪. charles: all right, let's start first and foremost, folks, with the fact it has been a really strong run for the stock market. so over the last 30 days, 23 has seen the s&p 500 higher, right? so, i mean of the last 30 weeks, 23 weeks, i mean that is huge. it only has happened a few times in history. we're in sort of rarefied company. it does show you that hey, it was pretty good and of course going all the way back to 1989, the last time this has happened to a degree it has felt stealthy. that brings us to the point this is unique market. we all know it is grand slams the "magnificent seven," they enjoyed meteoric growth. recently it has been the magnificent one, nvidia. look at this folks. it is really intriguing. they had a market cap in october of 2022 of $286 billion. coming into today, $2.8 trillion. think about the kind of wealth. by the way anyone could have participated in this wealth. that's why i call the stock market the greatest wealth machine in history. of course it created a problem though. everyone, including most hedge funds are loaded to the gills with these names, right? everyone has exposure to the "magnificent seven," and i know many will point to, solid performances recently, you know, take a look for instance, year-to-date, utilities have done well. they have done better than tech stocks, right? you have had some areas that have done well, energy has done well. here's the thing though, by the way, only two sectors are down for the year but there is another way of looking at this and we've had a lot of guests who have come on in the last couple months, say go for equal weighted this takes out all the market cap stuff. this is the problem with equal weighted, timber. it absolutely crashed. it has done nothing against cap weighted this is unfortunate, this is one of the more popular trades of the market. listen, every time these big names, high-flyers start to sort of stall, everyone says shift gears. so far shifting gears you've been massively underperforming. so where are we right now? well, the market right now, the lead horses all these overbought names we know. communication services, technology, utilities, everything else is neutral. energy coming into day was oversold. the only sector that was oversold. the big question though, if you can't buy these, what can you buy? what can fill the void? can this void even be filled? it is a big, big question. it has been a big dilemma for investors for a long time. my first guest actually wrote last week about barbelling your portfolio. he says it's not the answer. so let's bring in piper sandler, chief investment strategist, michael kantrowitz. mike, outside of buying quality, the answer that frustrates me the most when i have on guests, just do the barbell approach, it is pretty simple. you are saying there are times you can use this approach but not right now, right? >> yeah i think you do a barbelling strategy, i guess when you really have low conviction and are extremely uncertain and i think you know the reason higher quality and larger companies have outperformed in the last year-and-a-half is because their earnings have been better there is no doubt about that. there is no uncertainty about that. on flip side, smallest companies, small cap companies are biggest underperformers. their earnings deteriorate as they're sensitive to the higher interest rates than large cap. charles: you have one of your reports. i want to share it with the audience, the barbell approach, you say, hey, an alternative would be a balanced approach. >> yeah. charles: this is a balanced approach. outperformers, relative performance to barbell. obviously it has done extraordinarily well this has gone book to 1985. >> the idea you don't want the two extremes of the investment universe. for example, if you had half your portfolio in megacaps and half your portfolio in small caps you would have not done very well because half of that portfolio has not performed at all in the last two years, the small caps. you just would have increased your volatility and risk a lot because of that exposure to the weaker parts of the market. we prefer, you know if that was the option, prefer kind of moving towards the middle. instead balanced at the ex-extremes, be more in the center to avoid a lot of that volatility and don't sacrifice your portfolio to really low quality areas of the economy and the market. charles: right. real quick, folks. he is talking value on one side, growth on the other, go with the middle. middle has actually been doing pretty well here. >> yeah. charles: let me ask you, in one of your reports you talk about utilities. you say it can be the iron man sector. i love the information you gave on iron man football. i never knew that. golly that was the day when men were men. you let out five reasons utilities can be the iron man sector. i think middle one is a.i. play. lay it out for the audience what it means for their portfolio particularly as volatility picks up. >> i can add a sixth one we wrote about as a follow-up. utilities are trading like a risk-on part of the market which is not something i thought, those words would ever come out of my mouth. certainly because of the a.i. theme and because of risk on, so higher beta stocks were, lower quality stocks have really only gone up in the last year-and-a-half, when interest rates have come down. obviously utilities are a rate sensitive sector that outperform when rates come down. it has been combination of lower interest rates from, you know, early in april, not so much in the last week and a.i. that's propelled those utility stocks to trade like risk-on strategies. the second reason why i like that group is because if we do get into a hard landing economic scenario and credit spreads widen out, we do really see a broad-based systemic drop in the economy, then utilities become kind of the bastion of stability. charles: right. >> so they can be risk-off play as well. charles: right. they have always had that role. that was always their traditional role, right? the ultimate safe haven. get a nice dividend, cash is steady. speaking of the economy slipping right, i'm reading all over the place people comparing your recession indicator with the sahm rule things like that. a lot of similarities, the number unemployed is the numerator of rates that may be only thing that is different. what i thought was intrigue about this is the signal. it worked really, many times. just how close are we potentially going into recession? >> well, you know, charles, i don't like the word recession because i think it mine as lot of different things to a lot of different people. obviously the 07 reference comes about. so the recession is a hard word to explain. i rather think about it, is unemployment going to continue to grind higher? i say yes. is the economy going to continue to broadly muddle along? i think yes. i don't think the economy will fall off a cliff n that context i don't think we're close to that. i think the labor market is softening under the surface for a while now. that will continue. there are a lot of tailwinds in the economy like low oil prices, fiscal spending, a massive wealth effect, flexible labor market, boomer generation with a lot of wealth that could moderate the economic downturn that we expect to continue. i don't think that's a terrible backdrop for equities to see the unemployment rate grind higher, helping bring inflation down, get us a few rate cuts from the fed. charles: right. >> to me that is kind of more of this goldilocks type of environment which traditionally doesn't mean higher unemployment but in this case i think it does. charles: all right. and by the way i got to go but my number i think is 4.1. i think that is the number that gets the fed to move. do you have a number that you think can trigger the first rate cut from the fed with the unemployment rate? >> i would agree with that just looking at the unemployment rate. that is their target for the next year f we hit that in the next few months, they will have to raise their target most likely. probably that would be, anything above that would certainly be a surprise because they're not forecasting it. charles: great stuff, michael. we covered a lot. i always appreciate you. >> take care. charles: folks, speak of recessions the yield curve yesterday, "wall street journal" took a shot at it, right? it has been the most popular recession predicting tool of all time, it hasn't worked maybe it is broken or maybe it is rusty. i want to bring in mosaic chief strategist, phil blancato this is "wall street journal" article yesterday. essentially you have the inverted yield curve you get the shorter term rate above the long. they use a one year and 10-year. a lot of people use two and 20. whatever it doesn't matter. it happened in a long time. i think we're at a record right now. >> we are. charles: typically, folks these are great lines here. you have inversion, recession, inversion recession, inversion recession, inversion recession, inversion recession, inversion recession, inversion, nothing, it doesn't work anymore all of sudden? >> this time it was different. this time we hiked interest rates because the economy was hot. we rescued the economy by printing a whole bunch of money. pushed all the cash into the system. the inversion is what the fed did to save us rather than cooling off an economy. it has proven to be different. you see this methodally grind lower on inflation, why it is taking so long to get there and the fed is not out of the way yet. charles: possibility of rate hikes, that completely off the table? >> i think they put themselves in a box saying they won't do that anymore. but by the same token they're not there yet. to michael's point, this is gold goldilocks, full employment, lots of wealth from the roaring stock market and housing market, what happens because of higher wages getting these numbers down to 2% will be really difficult that means higher for longer. charles: pce friday from the cleveland fed. is there anything on here saying they're right? core comes in where they think. you know, the core is here. headline, i mean, if all of this goes according to plan, would the street have a sigh of relief or still more work to do? i mean we're getting close to 2%? >> this is why the market rallied this year. not because we have tremendous earnings growth. 5% wasn't bad. charles: right. >> nvidia killing to the points made already. i would argue take some profits. certainly when you look at this this market is what the fed might do, rates come down, we're still not there. put a few more points on the s&p 500. we're not there yet. i think that is the problem for the next few months. charles: all right. let's talk about one of the gripes of folks who watch in the market. that's the concentration of leadership. usually we talk about the top 10 this is percentage of the top five stocks, you know never have we have the top five stocks 27% of this market. is this a pro or a con in your mind? does this kind of skew weakness ors it it skew opportunity? >> opportunity. i will disagree with mike a bit. i think he is right you want to hide out in large caps right now. i like dividend and volatility. nothing lasts forever especially priced to perfection. the market i take other side of small cap trade. every time fed cuts rates small caps clobber large caps by 50%. we're not there, at least value names be prepared to go into nall smaller names when the fed cuts. charles: you got names sharing with us. could have sworn you were in carnival cruise? >> i did. made a bunch of money we'll do it again. what i like karn central they're finally making money. post-pandemic is demand craze. this is all-time high in bookings. secondly profit, could be scenario they make at least 15% earnings growth. biggest cruise operator in the world. demand is through the roof. the american consumer is not fatigued. they're out spending money. carnival cruise it. charles: cwt a water stock? >> they own several different states in the which is, expect a double in the next 30 years. these are safety names. i think we're in a time of volatility. i know it is a good market. i'm afraid of next two months. 2 1/2% dividend, 15% earnings growth. 10% cash on cash. this company does really well. great margins. it is safe. why not have safe in your portfolio. charles: water never goes out of style. >> we're never in a drought. charles: thanks for the shoutout. speaking of shoutouts we're celebrating the 10th anniversary of "making money" with charles payne. thank you all for being here with us. we'll be right back after this. >> hey, charles, it is bret in washington d.c. listen i want to say congratulations 10 years, 10 years "making money" with charles payne. i made money with charles payne. have you made money with charles payne. happy anniversary. i hope you make a lot more money with charles payne. congrats on 10 years in the chair. 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for instance, let's start with fundamentals, what fundamental improvement. s you see at the time that gave you the comfort and confidence for you to make that move, you and your team? >> first off, charles, let me say happy anniversary. i always thought you were a 10. charles: [laughter] thank you very much. >> in terms of forecasts, what we do we maintain a rolling 12 month price target mainly because our equity analysts look 12 months down the road and they compare the intrinsic value of the stocks that they follow and if the value of that stock is higher than our forecast for the market, they make it a buy. if it is less than the market they make it a sell. so what i do is, i include, in terms of fundamentals where earnings are going. obviously we just completed q1 earnings and growth has come in much stronger than expected. also we're looking for almost 15% earnings growth in 2025. i also look to technicals. so basically fundamentals tell you what but technicals tell you when and from a point and figure chart technique by looking at the target prices of the stocks in the s&p it's also implying a near 10% price appreciation and then historically how does the market typically do in election years and after? and so that 5610 target right now represents about an 8% price appreciation. so, i'm not reaching for the stars but i am certainly saying that i think this bull market will continue. charles: yeah, but i do want to say, hey, you know what, a lot of firms started to make adjustments after your firm did that and, to be quite frank with you, the targets have been limited. 5600 one is one of the of the more aggressive targets. on technical side, you mentioned point and figures. do you use moving averages or traditional double tops, those kind of things? right now your old target was 5250. i think that is key support on the downside if we pull back and hold i think it is another buy signal. >> i believe the same way. we recovered everything we lost in the 5 1/2% pullback on may 15th. historically we advanced another three to four months gaining another five to 8%, what we basically treaded water. so i still think that the weakness that we're seeing right now will not result in a new five plus percent decline. that is something that we'll likely get pushed out into later this summer. >> right. >> but also if we do end up bottoming in the next decline by july 31, history tells us we'll still be up for the year. charles: 20 days ago you were overweight communication services, energy, financials and technology. you still in those sectors, you still like those? >> sure because we, again, our focus is 12 months down the road. right now we're looking at red ink. we're looking at defensive doing better than the cyclicals because the concern is, i like to say that a.i. is what's driving technology but ei, earnings and inflation is driving the rest of the market and right now with worry that maybe we have to put the possibility of a rate hike back on the table which we think is highly unlikely, that's why investors are getting concerned because the fed will be, take longer in order to reduce interest rates, but we think that we will be seeing a nice spike in the market after the election has run its course and it will likely carry over into the first half of next year. charles: sam, we'll put your three of your current buys on the screen right now. i'm not sure we'll have time to go over all of them. start with one that caught my eye. clean harbors, i discovered diss stock after hurricane katrina. i never heard of the company. i started to follow it then. it was amazing moneymaker for a long period of time. why do you like it now? >> we're following your lead,
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