he knows how to do this. the first debate in 2020 he was not well, he had covid. the second debate in 2020 he did just fine, thank you very much. don't underestimate him. i do think what jackie was saying, jason riley wrote about this in the journal today, if biden has an off night, off night, he could be toast. he could be toast. biden's people control the rules committee at the convention. so it is not easy but it may well be a biden has a bad night. you know, here's, you tell me, he has 16 advisors up at camp david in an airplane hangar rehearsing 90 minutes twice a day. i couldn't do that. i have most of my marbles left. taylor: you have all your marbles left, all of them. larry, thanks so much for joining us. "making money" with payne starts right now. charles: all righty, thank you very much. good afternoon, everyone, i'm charles payne. this is "making money" and breaking right now, so the market really marking time ahead

of tomorrow's biden and trump showdown and of course friday's inflation news. there is this question that continues to sort of, you know, weigh on everyone's mind. what happens to the rally if nvidia continues to stumble? and it is time now for the financial media and policymakers to change the narrative about the super strong consumer. i think they're completely tapped out. those in the 57% below and we've got a lot of evidence that is mounting. you don't want to miss my take on taxing gas although it is not the kind you're thinking about. all that and so much more on "making money." ♪. charles: all right, really, concentration, right? the concentration story, you know, just a handful of stocks leading the rally, that is the narrative for 2024 of course. nvidia leading the way big time, this year's top five names the latest on that, 28% of the market cap. so again this is something

that's very unique in terms of history and one thing we've talked about a lot on this show, the role of passive investing, put that money into your 401(k). that money goes somewhere, right it goes into the market. what discuss it do? it gooses up winners. new money has to chase the winners. as they chase the winners, new money has got to chase those. that is passive investing. we're on a pace that will bring a new record, if we keep going the way we are right now, it will be a new record. think about as the funnel fills up all the cash will be obligated to chase, to chase. it is the ultimate virtuous cycle until of course it isn't. it is not just passive, folks. there are active money managers out there in a death struggle to beat the markets. in a good year like this, they have to really, really find a way. guess what they're doing? they're chasing the winners as well, the winner. overweight microsoft, amazon,

google, meta, lily, snuck in there to become a favorite. what is interesting, nvidia is right on the line there, right? but they're overweight these names big time. as far as everything else they're significantlynd weight. this is how they will try to beat the market. you have got passive investing. all the money goes into hot stocks. active investing goes into hot stocks. of course there are retail investors this is nvidia. this is the first quarter report. then they report of course the stock split. this is millions coming into that stock every day, the flow, the retail flow. it hit at one point 350 million bunches just coming in there every single day. why does the stock keep going up? look at that kind of cash! really is amazing. by the way this whole thing blows up, it may not be this year, next year, whatever, when it goes to hell they will blame retail. they always do. it won't be passive, won't be active, it will be retail. here's the thing the question now of course with nvidia, when

does it shift, right? you have got passive funds, remember all the money going in has to be earmarked somewhere. what about when it reverses starts to come out, right? passive funds will sell. active traders will sell. retail investors will hold until it is too late. so it is going to be tough. again all eyes on nvidia for now. we've had that big runup. then we had this big swoon. we came back a little bit. today's interesting because we were up a little bit. now we're pulling back. i think it will hold 117. this is just my line. i think 117 is the number. we'll see. now my first guest has been impressed with the way the market has held up during this weakness in nvidia. let's bring in wall street horizons vp of research christine short. christine, welcome to the show. >> thanks for having me. charles: it is really interesting, we had the inverse yesterday. nvidia back up. consumers, discretionary, technology, i think maybe toward the end of the day energy. everything else is in the red. the day before that, vice versa.

so on one hand it is good that investors completely didn't flee the market when nvidia was going down but can that be sustained? >> we only got a little taste of it over the three days. nvidia tapping out last wednesday. then falling, you know, three days down, you know, almost 13% in those three days. correction territory. but like i said, you know, it was positive to see the markets didn't completely collapse. charles: right. >> they were down a little bit. but this is a question like you said all of 2024 what happens when nvidia collapses when happens when megatech collapses? it was only three days we saw that but nvidia was back up but we saw investors go if into other stock, go into tech that is the sign of a healthy market. charles: right. >> despite the concentration, it is not over -- charles: sure, sure. >> we got a little idea of what happens when nvidia has a massive -- charles: earlier about an hour ago before the market started to get a little bit of a change

here i thought this was intriguing because the only sector that was up, discretionary. this is one of those at least at the start of the day everything was under pressure. nvidia was up a little bit. that came down. there are other factors in this market besides nvidia. are you thinking maybe the economy, what seems to be maybe worrisome about the market? too far too fast? what are some of your concerns? >> i think right now markets are flat. investors are in wait and see mode. you mentioned friday's inflation data will be huge. investors want to see does personal consumption expenditures come down 2.7% year-over-year growth rate we saw last month. we know the fed is following that very closely. charles: right. >> investors will have a better idea are rate cuts coming in september. that is when they are predicted to come, pushed out in 2025. wait and see mode. this year what am i concerned about? a little bit about the concentration i point out. also about s&p 500 revenues. charles: right. >> we talk about a lot of

earnings. earnings are stacked up to be great in q2. charles: right. >> revenues are not unhealthy. they're expected to grow 4 1/2%. that's great. we have seen a trend an companies missing expectation. charles: this past we called it earnings season, begins with revenues, which are harder to, you can manipulate the bottom line. there are a lot of levels to manipulate the last number at the bottom. at beginning, very top, income line, revenue line that is really tough. >> you can't manipulate that. like you said can't manipulate the rate of growth, but cost cut the way to eps growth. charles: sure. >> we saw a lot of cost-cutting programs put into 2023, why we see bottom-line growth is where it is but when you look at revenues they're a little weaker. we want to see robust revenue growth. charles: right. >> there is okay to cut short term but that is not a long-term strategy. charles: christine, part of that earnings will be phenomenal. this is where we're at right now, the street, the 12 months looking ahead.

>> yes. charles: but at some point this is built in, into the market. what do we get over the next 12 months and it is not 2.359. what if it is 2.49, what if it is 2.30? that is built moot market good news? >> this far out full year estimates are lofty. as we get to the quarter they come down. what is interesting about q 2. , which is pretty interesting, estimates stayed pretty high. analysts have not ratcheted down. started at 9% expectation for s&p 500 earnings growth at the end of q1. only come down to.8%. that is bullish sign for coming earnings quarter. charles: bottom line, stay the course for right now? >> bottom line the fundamentals look strong. that is why you're seeing high valuations on megatech stocks. charles: great stuff. great to see you. my next guest has a greater sense of concern i think about the economy most folks on the street. he points to several metrics

including signals we get from cardboard boxes. i want to bring in wisdom tree head of strategy jeff. in studio, my man. when i first started on wall street everyone used to look at corrugated boxes the volume there it makes sense of the we buy stuff, put it in boxes. it is weird, over the years it has come down naturally. i don't know if the stuff we're buying naturally, you had to buy boom boxes now you buy whatever but recently this pullback, you're kind of worried about that? >> look, everybody is looking at chips. the whole prior segment talked about n individual and everything. nobody is looking old-fashioned what will be delivered to your doorstep or what is getting delivered to your restaurant or what is getting delivered to your office? that might be a copier. a basketball for your sown you bought in my case. we've been seeing a noticeable retracement. look, it is economic indicators you don't know if they will be predictive or not. but you know we have a pretty nice fight, look at paper board

production with capacity utilization. what percentage of factories and overall commerce are we actually utilizing? we had 100% capacity, 90%, so on. so you would surmise from this data we could look at capacity utilityization to drift, drift -- charles: this is not old-fashioned thing that used to be relevant. we need to pay attention to it? >> if you're running a restaurant, are you buying 100 bottles of mustard, are you buying 200 bottles or 100 bottles? two boxes or one box? charles: another metric been used with a pretty good history, inverted yield curve. bars of recession, ahead of a recession, turns, ahead of recession, turns here, ahead of recession, turns here. jackie: ahead of recession. been down coming up here but a lot of folks are saying it is no longer relevant? >> we keep waiting here, it has been 21 months -- charles: has it because it has

been so long it doesn't work anymore? this was the most reliable indicator for pending potential recession, given six months, 12 months out? >> since we entered the industry, since we both entered the industry both of what we talked about. will jay powell give us couple cuts, three cuts maybe we're flat. how long does it stay inverted like this. it is pretty remarkable i would point out, don't forget we had two consecutive quarters of negative gdp growth in '22. charles: i remember that recession that everyone rallied around, said no, this ain't a recession, this is something else. gave it all kinds of names. they started tell us technically, okay. this is also intriguing. we of course have talked about the sort of lopsidedness of this rally, how it has been so concentrated. you posted this chart. extremely intriguing. 23 companies trading at 50 times or more. >> i know. charles: so i mean this is something that you just don't see. you have more companies trading at 50 times than trading under

20 times. >> we're in the s&p 100 here. there are 400 more names in large cap land. you don't know, 23 of them, many will prointo their earnings but which ones charles, which ones? charles: right. >> i don't know. when you start looking, wow, 100 of household names, types of companies you could say to somebody on the street they might recognize the name of company, fishing for something at single digit multiples you have two to work with. charles: these aren't working right now. i got an email from one of my subscribers, she is upset she is in the stocks, they're down. what do you tell people. >> wisdom tree mandates, a lot are these types. difficult to hold up with this stuff. peter lynch was telling us, what was first book, peter lynch book, 18 years old. charles: right. >> 20 times earnings was an expensive stock. charles: right. >> now here we are. charles: you're saying this is just not a paradigm shift but just another period in time just for a moment because unique circumstances the rules have changed but not forever?

>> yeah. and look -- charles: people own these stocks, should they be discouraged chasing instead, sell those and chase these? >> i wouldn't imagine they should be discouraged over the long haul. over the long haul the value factor should work. smaller company factor should work. reality, if you look at some of these situations here, maybe we don't head into a recession but who am i to say. you're sitting there 50, 60, 100 times earnings on increasing consensus that earnings will be perpetual. go back in time. general electric was top of the heap a quarter century ago. walmart, microsoft spent 15 years in the wilderness one time. charles: ibm had the spot for a while. a lot of names. we won't even talk about cisco. >> oh, man. charles: good you have is it, good stuff. the good news there is bad news i don't know. we'll go back into the whole thing. we have what i think is a legend on the street paulin-ramirez send who updated some work for us i want wait to share with

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♪. charles: so, when i was growing up there used to be this game on "sesame street" called one of these things is not like the other. that pops into mind looking at this chart from my next guest. we'll put it up there, former wall street chief investment strategist jim paulsen is with us. so, jim, we've got equal weight versus you know, weighted s&p index. it has been a disaster, but you made a series of these charts, sort of underscoring the fact that everything is down versus tech and maybe the inference there is how can we have a bear market when everything is already down? >> yeah, i think so, if you look, you got the equal weighted chart up there. it has always been up in the first 20 months in the past. same thing with small cap stocks, with each of the cyclical sectors, financials, materials, industrials, consumer discretionary, low pe or value

investing has been this way. even the s&p 500, high beta index, you would think if we had a bull market they would be doing the best and they're way out of whack with what they have normally done. so i think, in some sense this concentration is typically been a sign of risk for the market but i'm wondering if it has been so bad, and it's so concentrated and the breadth has been so lousy most of this bull market has not really been in a bull. so how can the bear bite of when there is not much excess or vulnerability in the market outside of a very small number of stocks. charles: biting those stocks have been treacherous so far. this kind of gets us to this, we're going to put up your bad news is good news table and if i'm reading this correctly, i'm going to start on the left-hand side. all news is bad, that means both good and bad news betas are

below average and yet we still get an 8.6% rally. is that the one week average annualized move? i mean, i mean that's a huge, that's a huge gain for news that's perceived as being bad? >> well, what that, what that means is if the markets been reacting in the past few months, to all news is bad news, when good news comes out or bad news comes out, it goes down, it doesn't do well, if you're in the situation where the last 12 weeks all news has caused the market to do poorly i think that's a good thing because i think what it says going forward the returns are good. what it says people are basically overly bearish because they don't even react to good news so that is a good sign of the future overall. the next part of that chart, all news in the past the market was going up. if the market's going up on good news, it's going up on bad news, that's not a good thing. the market doesn't do as well.

because that says people are too optimistic about things. charles: right. >> so what those charts show how the market has been reacting and then it says how the market does going forward. the best one there is the one on the far right about the markets have been reacting favorably to good news, poorly to bad news. good news is good, bad news is bad. if that is the case, going forward you get really spectacular returns, almost 25% annualized returns if you have been through a period like that in the past. charles: right. >> unfortunately, charles, we've been in the all news is good news this year. that's really where we have been. so the returns are not great going forward. 3.4%, that is kind of what the market has been doing of late, not that great but i do think the economy is slowing down, i think it is slowing down. then ultimately bad news will start to get bad. you see that in some of the second quarter cam stocks right now not performing well on bad news reports and good news will

be hoped for or good news becomes good. charles: right. >> also if it gets bad enough the fed comes in to support it. we may move to the far right side chart where returns are really good. the situation is where good news is good and bad news is bad. charles: i think a lot of this in the past this is predicated on valuations getting ahead of themselves. this feels like outside interference, particularly the federal reserve. if that is the case it feels so tough. you just can't sit down i just want to look at the fundamentals. xyz is growing their business, they're taking market share, they're expanding margins and the stock is getting walloped because the fed did this or did that. it makes it a tough investing environment. does it mean ultimately, ultimately if you do hold those names that qualify as great financial, fundamental investments that ultimately you will be rewarded? >> i think so, charles. we don't know. we're in a unique environment.

we're 20 month into this bull market. we've never had a first 20 months of the bull market in postwar history where the fed has tightened throughout the entire bull. that is where we are. because they did that, they never eased in this bull. they basically depressed the vast majority of this stock market. we have not yet seen a bull there. if they finally ease, we'll get a lot of support for the market we generally haven't yet seen. lower yields we haven't seen them. we usually see them a lot sooner. greater monetary growth of the money supply. we haven't seen it. we might still get that. if the fed eases, money goes up, yields come down, i think you will see confidence lift in the economy. charles: right. >> usually we have disinflation, better liquidity growth, lower yields and confidence at the start of a bull market. not 20 months into it. i think we might get there yet where we finally get all four forces helping us when the fed

finally decides they won the war on inflation. charles: right. >> if you have held on i think i still keep hanging on. they could have nice moves yet. equal weighted. charles: i think they will probably come back faster than normal also, being like the sort of the coiled spring thing. jim, thank you so much. always love going through your analysis, appreciate it. >> thanks for having me, charles. charles: all right, folks, our friend david nelson says buy the dip on safe haven stocks. also, he is looking to get into a company that has been reborn. stick around. he has two stock picks you may want to add to your portfolio. we'll be right back. ♪. [thunder rumbles] ♪ ♪ ♪ ♪

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♪. charles: so even the most bullish, right, it is kind of hard not to say okay, listen the market ral licker just maybe has gotten a little bit ahead of itself on a short-term basis. take a look at the chart. this is this year's rally year-to-date this is normally what we get with a presidential year. we talked about that a lot, particularly at the beginning of the year a lot of folks are confident, standard non-election year. the bias is to the upside. this is way ahead of itself. the idea is when it pulls back you buy the dip or hold out because you know it will go back

up. i want to bring in belpointe chief strategist david nelson. this market wants to feel like it relaxing a little bit, like idyllic summer days take a break. at same token it reminds me of a shark, when it stops moving it sinks. >> the nvidia marked a near term pause for people to kind of reassess here. the mistake we make, we're supposed to buy the dips, very often what we do, we really do, we start to sell the winners. we get nervous. we start to trim back some of our big winners. in the long run we actually pay for that. you lose compounding effect as these companies get bigger. charles: right. here is the thing also. put/call ratio, we talked about this a lot. it is at levels extraordinarily complacent, extraordinarily complacent. not a lot of shorts on the market. not a lot of puts on the market,

call volume is through the roof. historically that is not a good sign. >> it hasn't paid to be diversified. maybe this says something about being diversified. we're jammed into handful of stocks. charles: they're great companies. they're great companies. here is the rub, there are other great companies out there not as food as nvidia. there are companies that are really executing, the stocks are going begging. do you sell something like that? >> you dig down, there are a lot of great companies out there that fit that bill but a lot of these companies are challenged by the federal reserve. rates are really restrictive. it trickles down through the economy. until the fed gets off the pedestal, starts to cut the rates you will not see small caps and other names work out. charles: talk about names out there. godaddy. >> this is my new hot stock. this company was dead in the water for five years. charles: right. >> october last year it exploded higher. i didn't understand really what was going on. when i dug into it what they

were doing. they bought a company back in '21, point. they're point of sale. they're in the transaction business. they added an a.i. platform to therapy sites t does a lot of work, help build the sites, manage social media, company interface. this company is cheap. 6% free cash flow yield. this stock could go a lot higher. charles: walmart, we know they're in the sweet spot, right? the groceries, the pricing power, it just feels like -- >> if you're trying, if you're trying to keep up with the market, you have a lot of high octane names this is a name that provides some ballast for the shares. charles: it is new high, near all-time high. let, i got a minute to go. i talk about some of the things you like to discuss tomorrow night from financial point of view, right? dedollarization. a lot of people blow off. charles: this is big. >> this is big. you will hear trump bring this up. the world is pulling away from us. we get enormous benefits from the dollar being reserve

currency. "brics," brazil, russia, india, china, south africa, now it is bigger, saudi arabia, iran. not a lot of friends on that list. charles: right. >> increasingly transactions are being done not in dollar currency. charles: before i let you go, entitlements, seems like we get new ones, the entitlement list has grown. it is college bailout work that be recurring entitlement? >> fdr was brilliant when he put social security in place. life expectancy was 58. he knew no one would live long enough to collect it. today it is 78. they obviously have to address it. they have will not address it in the debate. charles: he got the idea from bismarck. when bismarck put it in place in germany, life expectancy was less. 59 to 60 the only way to hold off socialism. good to see you, my friend. >> thanks for having me. charles: for the most part this year it has been systems go for the broad market. we know insight was happening,

we talked about that but niches which significantly trailed the market that is what everybody is wondering when does that turn around, specifically mid-cap and small cap stocks. listen, they have had a tough go of it. in fact just here recently we could see the bias is starting to shift just yet again but in the wrong direction. i want to bring in bank of america u.s. equity strategist and head of u.s. small and mid-cap strategy, golly, you've had a rough year because the area that you focused on had a rough year. just short term we've seen the tide turn. mid-caps bias to the downside. we know small caps, at least by the russell, midterm. i mean, how do you navigate in an environment like this when these large cap names are going through the roof? these, all the time and these keep struggling all the time? >> right. i think, both of the indices, the large and the small cap indices have issues. obviously the large cap index is very concentrated in a small

number of stocks. the small cap index, you have a lot of stocks are non-profitable. a third of the russell 2000 has no earnings. a lot of stocks are very rate sensitive. there is refinancing risk. charles: that maturity wall everyone talks about looming large, cast as dark shadow over them? >> right. i think near term the russell 2000 will continue to struggle until we get more clarity that inflation continues to slow. the fed is likely to start cutting. i still think there are a lot of opportunities within the small cap segment side. if you avoid areas less exposed. >> i want to talk about that, also in your report, most recently published the economic phases, you know, a lot of times analysts come on, they talk about early cycle, late cycle those things. explain this a little bit with respect to timing on these stocks, maybe doing better? >> yeah. i mean so we put together a bunch of different macro indicators to figure out where we are in the cycle. earlier this year we moved from a downturn, what is more of early cycle recovery period. we've seen that sort of global

synchronization, a lot of indications to from regional strategists as well. that is environment where cyclical stocks do well, where small caps do well. i think there is a lot of macro support for small caps right now. charles: right. >> profits are recovering. just given the fed, also given revision trends are still negative, i think investors still want more observation, back end profits recovery everyone is calling for actually comes to fruition. >> factors for the second half, positive estimate revisions. so you have to be a specific stock-picker in this field for right now? >> right. i think it is a time where you want to be very tiff, rather than just owning the index which i think can struggle. so i think you want to own higher rather than riskier small caps. value stocks still look good. and i think given the environment where estimate revisions are still negative, owning stocks have seen the estimates get revised up have generally been rewarded.

charles: to a degree the script has been turned upside down. i was having a conversation a few moments ago with jim paulson, you sense when the tide turn comes on a little quicker. you see stronger than normal rebound, when small cap comes back into favor, when mid-cap comes back into favor? you. >> can see shorter periods where during a risk rally some of the areas within small caps have been neglected for a long time, health care, biotech, where there is a lot of low quality stocks. you can certainly see some areas rebund where positioning is light. i think longer term some of the factors that tend actually to be rewarded within small caps are actually quality, free cash flow. charles: right. >> so you know, i think given the uncertainty medium term, some of those factors -- >> before i let you go, the role of the fed, are we waiting for a rate cut to sort of say, before we can see the them generally off to the races? >> i think so. at least confirmation that you know, we're likely to get one. charles: right. >> our economists are expecting

the cutting cycle starting in september of this year, the latest inflation print was obviously a food good ten in the right direction. fed wants to see more than one good point. we want to see continuation. charles: we want to see something. thank you. >> thank you. charles: should investors be closely monitoring the yen? you know what, you should, for a lot of reasons and jim bianco is here to give us his take on it next. ♪. new centrum menopause supplements help unpause life when symptoms pause it. with a multivitamin plus hot flash support. (♪) daily zz for quality sleep. (♪) and enxtra for focus and clarity. centrum, powered by clinically studied ingredients. to me, harlem is home. but home is also your body.

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♪. charles: all right, folks, a lot of headlines out today about the japanese yen really just crumbling if you will to the lowest level versus the u.s. dollar i think since 1986. the big question of course why is it so important? why should we care about this? no one better to walk us through this than bianco research president jim bianco. jim, a lot of hullabaloo, this is really critical. i know you connect the dots and i just want to share one chart before you even start the explanation because we do see the u.s. 10-year yield, japanese yen spot price, they traded in tandem until recently, they have kind of gone their separate

ways. this is very critical. they have been major buyers of our treasurys? >> yeah. that's right. i mean, you know, it matters if you're a leveraged yen trader. i don't assume we have a lot of them watching us now. charles: no. >> how does it matter for everybody else. the japanese own one trillion dollars of u.s. treasury securities, they are the largest foreign-owned holder in world, much larger than china. their currency weakening against the u.s. dollar 1.60. they own a trillion dollars worth of bonds losing value against their currency. the theory, if the currency continues to fall they will start selling those trillion dollars of bondses to invest in japanese bonds. why take the currency risk. charles: right. >> that is why you see the tight relationship between yields in the u.s. and the currency. now it broke recently because they intervened and the market was thinking okay, the japanese

government is going to try to manipulate the currency lower, i'm sorry, mal manipulate the currency higher, the dollar lower that should help u.s. treasurys. that is giving way now. now the concern is, that this big foreign buyer might be less interested in buying treasury securities. charles: i got up the other chart, to underscore what we're talking about here. for years the blue line is china. they were the largest holders of our treasurys. more recently started to aggressively sell. the slack has been picked up by japan to your point. there was also this yield curve thing where they removed the yield curve cap on their own bonds making them more attractive. the yields are not anywhere as close but if you're a japanese investor at some point you may say, hey, these are attractive enough for me. of course at a time when our federal reserve just keeps printing, we, not federal reserve, the treasury, we're doing so many bond auctions we need buyers, all the buyers we can get. certainly if japan walks away,

starts to fall off, it is a big question mark, right? maybe the fed changes its mind quickly. hey i want to ask you something. there is a tweet, i want to ask your thoughts, from market to mayhem. so much money has been spent to fight normalization, the administration gaming the election but not realizing the obvious. american families would rather have a moderate recession then persistently elevated prices. do you agree with that statement? >> you know there was a study done by some harvard professors last month. they poll ad bunch of people and they said, that the american public would be more favorable to a 1% rise in the inflation, in unemployment rate, which is 1.7 million people losing their jobs than another 1% rise in the inflation rate. they talked about the psychological toll, the amount of stress that inflation has. bear in mind, inflation impacts 100% of the population where 1%

rise in the unemployment rate impacts 1% of the population. charles: right. >> this isn't going to be some kind of "hunger games" kind of thing we'll decide which one goes first but the point is i think we underestimate the amount of psychological damage and how difficult inflation is for everybody. it's a big problem and we tend to dismiss it or we tend to think it is going away, but the public is telling you no, we're really, really concerned about it. charles: it is interesting. because the fed seems like they can't wait to pivot back to jobs as opposed to you know, again, more focused on putting inflation away or, you know, listen, the recession, they were supposed to give us, ironic, maybe we wanted it, we could have pulled the bandaid off to this thing, back to real normalization, instead of engineered normalization. jim, i love these discussions. can't wait to talk to you again real soon. >> thank you. charles: folks the consumer is

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charles: in an interview yesterday, janet yellen stayed on crypt and repeat that had -- script and repeat that had we, america, are a good and strong economy. take a listen. >> if rates are held at current levels through december, do we risk sowing the seeds of recession? >> well, that's something that the fed will be looking at and with that said, the fed wants inflation to come down and made clear that when they gain confidence that we're on a

stable downward trend and they think it'll be coming to cause a recession when it's unnecessary. that's going to volunteer. >> that's recession in sight? >> we have a very strong economy. charles: as i'm reporting on this show, the one from city and bloomburg both in free fall. now, they're mostly sur surveysd for me really the best way to take the pulse of the nation and going to get worse and case in point general mills and bottom here and that's for the full year and prices out and volumes is down and the company said listen, how do we make sure volumes don't go down? we need business to go and they're starting to lower prices and lower them at one point on retail and one point on pets and internationally by ten points and look what happens.

volume in free fall and go to the end of the columns, negative, reporting net cells in north america and down 7% and pet down 8% and international down 10%. bottom line, folks, we are absolutely broke. so then someone will say, what about tsa. that's been real hot. yeah, look at weekly credit card and every day they put out credit card sales at bank of america and airlines in a sharp decline and corroborated this morning and southwest painted a really worry some picture about rapid demand declining and not only reporting a terrible number and key measure in the industries and i can't tell you how big that s. offsetting maybe fedex. fedex is a great proxy for the economy and beat on top and bottom line and they get good guidance and a lot of what's happening has to do with

competitive advantage they have over ups and probably succumb too quickly to union pressure and supply chain prices and the dow jones transportation index and talk about a proxy for the economy, it's been absolutely annihilated for s&p 500 and this has happened and it's going to crush households. people are starting to really, really get hammered so doesn't matter what the media says, administration says, we are going to see prices come down a bit. but it won't matter. most consumer at this point in my opinion are tapped out. and i want to bring in chief economist daniella mccaul. so, daniella, many companies now taking action. the pocketbooks are shrinking and has a lower price on 3,000 items and you want your thoughts on the true health of the

american consumer. >> very much going for them and consumer is going to be exhausted and if we look at the data points and it's absolutely evident when we look at consumer confidence and backed out in the environment and also in expectations and look at this small business confidence and looks like it's relatively healthy and it's in the tenth percentile of the historic average. so what we're seeing is consumers simply cannot make ends meet and they're doing what they can, but on top of that, they're trying to get close to making ends meet by adding credit card debt and we're in the weakest strong economy ever if you look at the level of growth adjusted for public debt and it's the worst in 30 years. charles: so what does that put us with chances of a recession?

no one on wall street thinks it's a recession and makes me believe there might be one. >> exactly. exactly. you really need to worry about recession when the expectations of recession going to virtually zero. that's when you actually start to get the complacency in wall street numbers and wall street numbers are assuming that consumers are going to continue to spend this despite all the circumstantial evidence they're really hurt with consumers and additionally we're seeing that the bloated level of government spending is not working on the gdp figures anymore. we really need to look at elements in reality and risk of recession is not just evident, but very clear to look at consumption figures and in small business figures. charles: only have 30 seconds and the show is over in a minute. mary daily saying everyone trust

the fed. are they too cocky at this point? >> oh, the problem is not the fed. the fed is trying to do whatever they can with a little things they can use, which are rates but the problem is the treasury. when the cbo projects a $2 trillion deficit, going with the environment they consider. with no recession -- charles: i got to wrap it up. you made the point. treasury you're right should get the blame. folks before it's too late, i want to talk about with our friend in europe. it was a economic power house and massive welfare obligations and too many regulations and high taxes and the stupidest stuff keeps going and denmark they're going to tax cows for having gas. think about that, liz. that's economic suicide right there. liz: okay.