and i've got to deal with that as a growth investor, as an optimist and believer in american ingenuity. maria: would you buy this rally today, would you buy this market >> well i am by definition deploying new capital that comes in so the answer is yes. maria: all right we'll leave it there. adam johnson, james freeman, monica crowley, its been a pleasure. have a great day, "varney" & company begins right now. stu take it away. stuart: good morning, maria, good morning, everyone. here we go again, inflation coming in strong but so far, we've not seen a really strong market reaction. today is producer prices basically, business costs, up 8.7% in the last year. that compares to a 9.8% increase in july. so inflation is slowing. so look, here is the state of play on inflation. we've got 8.3% inflation at the consumer level. it's 8.7% at the producer level. what's the federal reserve going to do about this? they will certainly raise rates

but when and by how much, all we've got is speculation. we'll be doing a lot of that. the dow down 1,276 points tuesday that was the seventh biggest point drop ever. this morning no real bounce up what 40 points at the opening bell. the s&p 500 was down 4.3% on tuesday. backup this morning by a mere 10 points that is all of a quarter of 1% and the nasdaq, that was way down yesterday. it's not way up this morning. minor league bounce of 44 points it was interest rate moves that shifted the market yesterday. here is where they stand now after tuesday's big jump in yields. the 10 year moving up again just a little 3.44% and look at the two year, 3.78. as for bitcoin, really not functioning as an inflation hedge at all. it's back to $20,000 per coin, but it was actually down when the big inflation news came out yesterday. not an inflation hedge.

that's the market news. inflation again dominating wall street. the president's speech on inflation yesterday, not going down well. he tried to take a victory lap on the day inflation hit another 40 year high. he brought in the perpetually melancholy james taylor to heal our soul. today, the president goes to detroit, to tout electric vehicles and he's forcing us all to abandon gas powered cars forcing us into electrics despite their high cost. the average ev costs 66,000 bucks, gas powered, 48,000. ukrainian troops keep pushing forward. the latest report suggests they've retaken a town only two miles from the russian border. we're still waiting for putin's response to ukraine's stunning recent advances. in london, moments from now the queens coffin will be moved from buckingham palace to westminster hall about a mile and a half away. king charles, prince william and prince harry will walk behind. you will see the procession.

it's wednesday, september 14, 2022. "varney" & company is about to begin. ♪ start another brand new day ♪ stuart: well i'm so happy that lauren simonetti is back with us today. we're looking at the pictures of sixth avenue in new york city. it's going to be a beautiful, bright, sunshine day and lauren simonetti making me smiling. lauren: you're making me laugh. stuart is dancing, making funny faces. yes. stuart: [laughter] lauren: he's blushing. stuart: you're laughing what i call james taylor, the perpetual ly melancholy james taylor. lauren: what's the piece on fire and ice what's his big song? i've seen fire and i've seen rain and sunny days, et cetera.

lauren: [laughter] stuart: let's get serious, why not? stop smiling because we have to talk about inflation. take me through the producer prices. lauren: we can smile because it's a little bit more positive than what we saw yesterday but i will say this. this does not change the narrative whatsoever. inflation is entrenched. that shows up when you factor out the energy and food, at the core level. prices rose 7.3% in august from last august .4% from july to august. the headline number, a positive 8.7%, the lowest in a year. so bottom line, bit tamer than expected, not tame enough to change the mood on wall street. a minor bounce in futures right now. there's a one in three chance the fed moves 100 basis points next week. stuart: oh, that'll hold the market back a one in three chance? lauren: 34%. stuart: thanks, lauren. look at futures again on your screens left-hand side, that's not much of a bounce, after yesterday's huge sell-off, now is it? it's time we spoke to eddie ghabour again, the mans got it right, so far. are you still going to be right?

is this it? was yesterday the big sell-off or is there more to come? >> stuart, there's more to come i mean, this is just the start of this third leg down that we've been warning our clients about and been prepared for because what we're going through right now is the deleveraging process. that's what the fed is doing and it's very painful and it's going to be extremely painful, but that's the price you pay when you print too much money and you spend too much, and now we're in this position where the fed is going to be tightening the balance sheet and making the credit markets even worse, and so as we look forward here, the next thing that's going to happen that's going to cause market turbulence in our opinion is you're going to start to see a lot of companies have major revisions to earnings. this earnings season is not going to be very good, so i think folks need to just kind of stop talking about this soft landing narrative because it's going to be a hard landing in our opinion and earnings are going to continue to show that. i do think we'll probably have some buying opportunities here in the fourth quarter as we've

been saying, but we've been very active last week and heading into this inflationary number for our clients to prepare for this and now the next thing is will this stretch into the first half of next year? i think after what we saw yesterday, the fed is probably going to be wreckless in our opinion in raising rates too much for the rest of the year and we may not see the full bottom until next year. stuart: real fast, i only got 20 seconds. do you think the fed could possibly move up 100 basis points, do a paul volcker? >> i think they could. i think it be a big mistake in my opinion if they do. look the bond market has done enough tightening for them. in my opinion, if they just let things go the way they were, inflation is just going to slowly go down and we could have a softish landing, but they are hell bent on raising rates and that just makes the problem even worse. stuart: got it. eddie, thanks very much for being with us all this time. you will be back real soon that's a promise thanks very much indeed. >> thank you. stuart: change the subject. queen elizabeth's casket will

leave buckingham palace in just a few moments and travel to westminster hall. what are we going to see lauren? lauren: she's carried by horse drawn carriage to westminster hall. it's a 38-minute procession, solemn without music, without fanfare. her coffin will be followed by king charles iii and members of the royal family as they transfer the queen's body to the british nation, to the people, wherein the westminster hall the queen will lie in state for four days before her funeral which is on monday. one million people are expect to pay their respects. some have to wait 35 hours to be able to do so and we're being told that all viewing areas are full and people are being directed to the screening areas to watch everything that they want to see upfront on a screen instead. stuart: i think we're going to see king charles, prince william and prince harry walking behind the coffin. the other royals will be riding in a car. i think you'll see a scene

reminiscent of the funeral of princess diana where charles and other royals walked behind the coffin. you might see a repetition of that. lauren: 9:22 eastern time is the time that we're expecting to start seeing all this. stuart: okay, we shall. now wait a second. bring me up-to-date on the primary results from yesterday. lauren: okay so new hampshire is the big one, the senate race there because that could be the deciding factor in control of the senate. that's where retired army general done bolduck holds a very slim lead overstate senate president chuck morris, just a few thousand votes left to be counted. morris, however, conceded on twitter late last night, saying he called bolduck, wished him all the best and the focus needs to be on defeating democratic senator maggie hasson in november. so much outside money poured into this race so this was a big one. staying in new hampshire congressional district one, this is a big deal because caroline levit is 25 years old. she's a former trump aide. she beat another trump official

matt mowers and now faces congressman chris pappas, one of the most vulnerable democrats and in the governor's race easy way for the incumbent republican chris sununu, not so easy win in rhode island, daniel mckee wins barely survived his primary. stuart: matt schlapp is with us this morning. matt, trump-backed candidates appear to be doing very well this primary season. is he very much now the leader of the republican party? >> yeah, you know, essentially, stuart, he's the incumbent president for republicans and if he chooses to run again i think that's pretty much how voters are going to view him. he's the endorsement that matter s in these primaries. he didn't endorse in the senate race, but bolduk was clearly associated with trump policies and maga activist and in the house race leavitt was a

darling of the key maga influencers so yes i think when these primaries are behind us, the one takeaway is donald trump still has his stuff stuart: i've seen one headline which suggests that democrats went to the moderate side during their primaries. republicans went to the maga side. would you agree with that? >> no. there's nothing moderate about this modern democratic party that is embraced socialism. i would agree with you that their marketing is smart enough to realize they can't win this hard core leftist socialist so they try to portray themselves as moderates but i really can't think of anybody across-the-board that isn't down the line on all these policies defunding the cops, pushing gender confusion in schools, being weak when it comes to crime in the border, so we have stark lines in this country between republicans and democrat s and in some ways it's a very easy choice for voters. stuart: we've got a new poll that shows a majority don't want president biden or former president trump to run in 2024.

seems like there's pressure for a new generation of politicians. you feeling that? >> yeah, i think this is a typical american sentiment. the more we get to know politicians, sometimes, the less we like them or they get what's called overexposed. this is a very typical thing. that's why people like nancy pelosi i give credit. she's hung in there for like forever, even though she will be done here in a few months. i think that is not as important as what do, who would win the primaries? and these gentlemen put their name on the ballot i think both would win in their primaries. stuart: we hear you. you're absolutely sure that nancy pelosi is done as speaker in just a couple months okay matt, we'll leave it right there >> put a fork in her, stuart, it's over. she's going to be an ambassador, soon. stuart: matt thanks very much we'll see you soon. thank you. look at those futures not that much price movement and certainly no big bounce after

yesterday's huge sell-off. look at this , stunning video, fox news cameras were rolling when several migrants dressed in camouflage scaled a border wall in arizona. we'll have the border report for you, coming up and then there's this. speaker pelosi had to direct the crowd while celebrating the inflation reduction act. roll tape. >> your extraordinary leadership has made this glorious day possible. that's an applause line. >> [applause] stuart: perhaps they needed to be queued to clap on the grounds that the market was tanking. we'll be back. ♪ i can make your hands clap ♪ ♪limu emu & doug♪

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best move i've ever made. ask your dermatologist ♪ i won't make it any other way, i have seen fire and i've seen rain ♪ >> and how about james taylor, a voice that heals our soul, and unites a nation. stuart: okay, [laughter] the president and the democrats celebrated at the white house just as the markets plunged and inflation took off. congressman mike waltz, republican joins me now. you know, congressman, that was really really bad timing to do a celebration of the inflation reduction act, now, wasn't it? >> yeah, there's nothing like

having a concert on the white house lawn as the market is tank ing by 1,200 points and people on fixed incomes are watching their 401 (k) and their retirement savings get wiped. i think james taylor needs to go back to north carolina where gas prices are still through the roof and reconsider. stuart: it was just so inappropriate, i thought. a man singing a song like that about suicide and heroin addiction, at a time when you're supposed to be celebrating. somebody in the white house has got to get a grip on the president's presentation of the issues, don't you think? >> well, yeah, there's that, and oh, by the way fentanyl and opioids are the number one death , cause of death now of young people, but sit that aside i mean, this has just been tone deaf after tone deaf, coming through 9/11, saying afghanistan was an extraordinary success, but the thing is on inflation, stu, this isn't going anywhere. yes, regular gas prices are going down, but what i'm watching is the cost of diesel

which is still near $5 a gallon, which obviously powers our trucks and our transportation cost that underlies everything that we buy from groceries to homebuilding parts and that is still sky high. you add on top of that the fed that's going to continue to raise rates. you add-on top of that russia turning oil & gas off to europe and an asinine energy policy here in the united states and i think inflation is here to stay and i don't see a soft landing for our economy. stuart: let's turn to something positive. i think this is very positive. ukrainian troops have retaken a town just two miles from the russian border. seems like the tide is truly turning in that war, so congressman, should we help zelenskyy flat-out win? >> oh, absolutely. been saying that since day one. if he had had these weapons before the invasion, maybe it wouldn't have happened and if he had these weapons faster then

maybe ukraine be in a much- better place, but we still have a long way to go, stu. again, russia is using energy as a lever. there are more holes in the sanctions than swiss cheese. china is replacing everything that russia is losing in europe. we still have a nuclear plant that is caught in the fighting, europe's largest, so we still have a ways to go and the question we keep asking the pentagon is how do we sustain this over the long term, but right now, look. i think the world is thrilled and surprised at the effectiveness of this offensive. stuart: but will ukraine play any role in the november elections or is it inflation, inflation, and crime, and the border, an that's it? >> yeah, what we're seeing, stu , is it's border, crime, the economy, and education what's being taught to our kids in schools. clearly at the top. stuart: congressman, always a pleasure. thanks for coming in with us this morning mike waltz we appreciate it, always.

>> thank you. stuart: a new report reveals just how much russia spent to interfere in foreign elections. the number, please? lauren: $300 million, since 201d tip the scales in favor of putin 's preferred candidates. how? funneling money through shell companies, through think tanks, electronic transfers, paying in cash. the source is the state department cable and it shows what's been a successful strategy of the biden administration. counter-potential russian interference by exposing it. sunlight is the best disinfectant. the report flagged two individuals specifically and one with the alleged financier of the wagner group, the one that sends fighters to ukraine and syria. stuart: mercer it. so they are just named a couple of individuals. did they say whether they were effective in affecting foreign elections or just here is how much money they spent. lauren: no and i know we're all thinking about the u.s.. stuart: right. lauren: but it was actually

happening in two dozen countries so this is widespread. stuart: but america was part of the -- lauren: a big part. stuart: got it. thanks very much. look at the opening bell futures i should say. we're up just a tiny fraction. 57 points up for the dow after 1,200 point loss yesterday, up 10 points for the s&p, a quarter percent after a 4.25% drop yesterday. that ain't no bounce and a little bit of green but not really coming back much, is it? the opening bell's next. ♪ ♪

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stuart: the queen's coffin has just left buckingham palace. there is now the procession to westminster hall where the coffin will lie in state, and allow people to pay their respects by filing past it to look. you will see king charles, prince william and prince harry

walking behind the coffin. there is no music. the procession will proceed in silence. it'll take about 38 minutes to get to westminster hall. we'll keep you up-to-date on what's going on there. back here, we have the markets, no real bounce after yesterday's big sell-off, bring in david nicholas with us. do you expect another big sell-off before the end of the year, david? >> well, stewart, i mean as bad as yesterday was, i mean, i do think the markets under reacted. the market has no idea how sticky this inflation will be. if you look at rents if you look at wages if you look at natural gas that's up 40% year-over-year i mean, when it comes to the markets in order for the feds to be effective in bringing inflation down stewart they have to get the fed funds rate above the rate of inflation where is the fed funds rate today? 2.5. where is inflation? we're running over 8 so we're a long way away from kansas, dorothy so i think the market is vastly underestimating how high rates are going to have to go. stuart: so you aren't doing any dip buying at this point, are

you? >> so we are looking, there are some things we're looking at we looked at adyuy, which is a tech name but i told our traders yesterday david do you want to buy and i said let's hold off because i still think we'll see damage but it's a tough time for investors stuart. i'll start calling two year treasury the stuart two year, but it's close to 4% right now. that's competing with stocks. stuart: it just make sense doesn't it? you buy a two year treasury, but you got to hold it to maturity and not trading this thing. you buy it, you hold it. your yield is about what, 3.5% at least, almost 4% and i think you get a small tax break on the interest. i just don't see what's wrong with that play? >> stuart, you're not alone. what you just described is what many investors are making that. why would i go and take this risk in stocks when i can go get 4% on a two year. the challenge is going to be and this is what i have been stubborn on this. i think rates are going much higher so we could see six, 7%

fed rates, treasury rates over the next year so this is why you still want to be careful but i agree with you stuart. it makes a lot of sense. i lean towards fixed income and i lean toward dividend-paying stocks right now if you are doing any dip buying. stuart: so you're telling me we could see inflation at what, sorry, interest rates from the fed go up to 6%. where are they now about 2% just above 2%. you think they go from 2% to 6% and if that happens, the market sells off, guaranteed. is that right? >> yeah, well let's not mince words here, stuart. if the fed is serious about bringing inflation down we've got a long way to go. yes i do think we could see a fed funds rate above 6% because we're not seeing inflation decline, stuart. this is what i said it's a data- dependent market. we just aren't seeing it come down. if the fed, we seem to live in a world where we don't want consequences for our actions. inflation is transitory. well that was a lie. we're celebrating the inflation reduction act. well, that's a lie.

the federal reserve's target is to be at 2% inflation by the end of the year, stuart? it doesn't take a phd to understand that is an absolute lie, so yes. i will say, i think we see a fed funds rate well above 5% next year and that does some damage to stocks stuart. >> [opening bell ringing] stuart: ouch, we hear you looking at the markets after yesterday's huge sell-off i'm not seeing much of a bounce at least not when that opening bell rings and it's ringing now and trading has begun. where are we? we've got a couple of dow stocks that are winners and most of them about two-thirds of the dow 30 are in the green and the dow has opened with a 75 point gain after losing 1,200 points yesterday. so let's have a look at the s&p 500, where is that this morning? slightly higher, up what about one-third of 1%. it was down over 4% yesterday. no bounce for the nasdaq either, up .35%. have a look at big tech. huge declines yesterday, and no bounce this morning.

i mean, we've got meta even further down today. susan is with me this morning. susan, we had big tech was crushed yesterday and i don't see any bounce this morning. >> nope. so $1.5 trillion in value loss yesterday, worse sell-off in two years, and oh, by the way elon musk is playing federal reserve chairman this morning. did you read his tweet? stuart: what's he saying? >> he's tweeting the fed should be cutting interest rates by a quarter point instead of raising them by 75 as expected next week and the reason is because of deflation and he was responding to a tweet by cathie wood, that was talking about all this new technology especially electric cars that is deflationary long term. now, i would say that the fed probably is going to go 75 anyways, regardless of what elon musk says, and that's because they need to slow down the economy. they are trying to get deflation meaning bring down inflation and did you see yesterday some of the tickets put in during that dip buy there was some dip buying taking place. not a whole lot but apple and

tesla were actually two of the most popular bargain buys yesterday on fidelity so there were two buy tickets for every sell, but you were just talking to one of the market specialists stuart: david nicholas. >> i would say that's probably telling you everything you need to know right now. the two year yield highest in 15 years looking at 3.7. i think market expectations have brought up their estimates for yields and interest rates of 4% by next year. stuart: they shot up yesterday, still going up today. tell me about bitcoin, because it's just not acting as an inflation indicator is it? >> no, so what crypto trades as is like a nasdaq 100 tech stock these days, so as the nasdaq goes, so goes crypto, bitcoin, and you're right, because bitcoin was supposed to be sold as a hedge away from broader markets. hedge away from bad government policy, not really acting that way, but i would say 20,000 is a good floor, because we haven't dipped back to those 17,000 or $18,000 lows that we saw in

june during those sell-off. you had that big ethererum merge taking place in just a few weeks time. stuart: oh, yeah that's a big deal. >> it's a huge deal. stuart: i think it is anyway. one of these days i'll understand it. >> you'll teach me what proof of stake instead of proof of work is in ethererum i'm sure. stuart: okay, show me retaliatory let's see starbucks. up 3.5%. they have a turnaround plan. >> then tell me if you think it's actually a turnaround plan, because wall street is buying into these estimates right now, so they are trying to throw more money at the problem you have howard schultz still ceo until april next year when he hands over the reigns to the newly- hired ceo so starbucks is guiding they say sales and profit will grow double-digits over the next few years, 15-20% annually over the next three years. that sounds pretty bullish. i think getting there is probably going to be tough, right? they are going to spend about $450 million to revamp their north american cafes and they are expanding their employee benefits, also still building

3,000 more in china. you know, a few years ago they were building one starbucks every 15 hours in china, because that was the next hope or the next big market. stuart: apparently, wall street believes in this turnaround. >> apparently so. stuart: up 3.5% and they are saying we're going to do this , that and the other in the future >> but this high inflationary environment where food costs made up the bulk of that surge yesterday and also we're looking at wage costs and pressures as well. stuart: that could be susceptible to those pressures. how about google? i know they lost their appeal of a big european union anti-trust fine but still got to pay a big fine. >> yeah, so they got $200 million back, how about that, in a fine. they are still looking to pay about 4.3 billion in that anti-trust damage and so what the eu found was that alpha belt was guilty of using its android operating system to kill off competition. that lawsuit stems from 2015 so they have been appealing it. also you have amazon speaking of big tech they are raising their pay and benefits for their

delivery partners for the holiday peak season another $450 million worth here, so remember that they are also charging these third party shippers and sellers a surcharge this holiday peak season to cover some of these costs and some of these new initiatives includes about 5,000 a year for drivers to pay for education , financial support 401 (k) so we talked about amazon with its first profit drop and loss in seven to eight years and they are also facing inflationary wage pressures as well. stuart: they certainly are. no change for amazon this morning, at this point at least after big drop yesterday. now, can you show me a paypal and block? i know that they are digital payment services. >> yeah. stuart: is there something new on them? >> okay, so look at square. we're down another 5% after the 7.5% sell-off yesterday and you had a big cut overnight from evercore and initially they were calling 120 for square, now they are calling it $55. stuart: what? >> $55 stock so you could be down another 20% on square or

block as it's called now, because jack dorsey changed the name and the problem is, and i think this is a problem for a lot of other companies out there , is they are concerned about debt levels and whether or not consumers can payback some of that pay now or buy now pay later. stuart: that's the one. >> scenario because of rising debt levels in this higher interest rate environment. so same thing for paypal. stuart: you know, as you were speaking, the dow briefly went into the red, turned into the negative column. bounced back again. >> you're saying i'm the cause for negative moves in the markets? stuart: if i thought you could move the market like that -- >> that is true. that's power for you. stuart: it's now up just 10 points, that's all you've got down 1,200 yesterday, up 10 after what, six minutes worth of business this morning. now big tech i'm sorry dow winners chevron, j & j, oil -- >> oil. stuart: ibm is on that list again. s&p 500 winners, moderna, a vaccine company back, starbucks doing well we saw that one,

marathon, oil is doing well today. >> and j & j is also buying back some stock as well. stuart: that'll help. okay, nasdaq winners, starbucks, t-mobile, comcast, paypal, and qualcomm. the 10 year treasury yield where is it right now? 3.42%. where is gold right now? that certainly wasn't much of an inflation hedge, 1,713 per ounce. bitcoin as we've told you 20,000 bucks a coin. oil 88 i think, 88.59 is your price up a little today. nat gas also up a bit, 6% because it's all over the place these days and the average price for a gallon of regular is down to 370 in california though, it's still 543. coming up, the white house claims they have done more to secure the border than the previous administration. really? roll tape. >> we're certainly doing a lot more to secure the border and could be doing even more if republicans would stop their obstruction.

stuart: what! what! it's somebody else's fault? good lord. texas congressman tony gonzalez says it's president biden who brought pure chaos to his state. he's on the show. and there's this. the threat of a rail strike still looms and the food industry would definitely be rattled if a shutdown happened. food prices would go up. jeff flock reports, after this. ♪ ♪

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they will be arriving at westminster hall shortly and that's where the public will be able to pay their respects. tens of thousands are expected for 10 hour cues also expected. all right here we've got the markets. no real bounce after yesterday's big sell-off in fact whatever bounce we had is deteriorating, shall we say. we're up 80 points on the dow. we're up one, almost one, on the nasdaq. listen to this one. food prices are so high that couples are now fighting over what to buy at the grocery store tell me more. lauren: pine nuts. you dress your salad with a pine nut, it's crunchy, tastes good, expensive, $10 for four ounces, jalapeno potato chip, coke, kit kat, all unnecessary purchases at the grocery store. the wall street journal wrote a detailed story citing all those examples because you have two income households now fighting over what to splurge on , and what to leave out of the shopping cart.

pine nuts? they called it inflation in- fighting and these conversations that employed americans are having about cutting costs. there was one example and this seems completely ridiculous but it's true. the cfo of a tech start-up is now buying a 12 pack of coca cola zero sugar every other week , instead of every week, to save money. the chief financial officer can't afford a six pack or 12 pack of coke every week. stuart: that's an inflation impact story which absolutely is valid. good for the wall street journal , quoting real people. lauren: yeah. wide variety of people and it blew my mind some of the things they were watching because everything has gotten more expensive. you've got to cut where you can. stuart: pine nuts. lauren: too expensive on top of your salad. stuart: i'll never forget that. how about the railroad strike? that clearly threatens the food supply. jeff flock is in philadelphia for us. if they shutdown the railroads prices go up, right? reporter: no way around it,

stuart. by the way, i always fought with my spouses over groceries even when they didn't cost very much money. how do you think i got divorced three times? at any rate, as to the strike, yeah, it's going to cost more, no kidding. why is that? because so much of our food gets shipped by rail. take a look at these numbers. it's amazing how much grain, wheat, corn, soybeans get shipped by rail. 635,000 carloads of corn a year. wheat, 320,000 carloads, beans 250,000 carloads and much of our grain that is shipped overseas goes by rail, about 40% of that, and this is all coming as we approach the harvest when, you know, we're going to have the need for this. so we could have spoiled product out there, shortage, drive the price up. already the prices are high. you saw the cpi yesterday. corn, or should say cereals and flour, 16% up on the cpi yesterday. meat and fish up 10%. fruits and vegetables the same.

the white house is up against it with this. they like the unions, but they don't like what could be coming. take a listen to what they had to say yesterday. >> we are working with other modes of transportation, including the shippers and truckers, air freight, to see how they can step in and keep goods moving, in case of this rail shutdown. reporter: but the fact is, stuart, there's very little they can do. if we really truly get a big shutdown, you can't make that up with extra trucks. it's not just food. it's steel, lumber, oil, it's everything. stuart: yes, it is. jeff, you're all right and you really are something else. we'll be back to you at some point in the future for news on your marital history. reporter: maybe. stuart: i don't know. lauren: i have so many questions for him. stuart: we have questions but we aren't going to ask them. the dow is up 124 points. the nasdaq is up 65.

it's still only a minor league bounce. let's bring in economist john lonski whose been telling me about the rental market. your point is that rents are very strong, very high. they makeup a big part of the consumer price index, and therefore, you don't think there's anyway we get consumer prices down much anytime soon? that is absolutely correct. i mean, right now, luminaries like even larry somers are saying that next year, rental inflation will be running by 7% annually. the problem is, as you mentioned , is that rents count for 31% of the cpi. leave it or not. stuart: ouch. one-third of the cpi is rent? >> exactly so if nearly one- third of the cpi is growing by 7% that means just getting to 3% cpi inflation requires that the rest of the cpi grow no faster than 1.2% and that is not going to happen in 2023 unless we have a real bad recession.

stuart: but if jay powell sees that will he not be inclined, the fed, will he not be inclined to do a volcker, jackup rates by 100 basis points and kill this thing while you can? >> he'll have to do that if he wants to quickly bring the rate of inflation down to 2%. otherwise it might be best just to be patient as long as the rest of the cpi, that other two-thirds of the cpi continues to move lower, so it could be a great mistake on paul 's part. let's go ahead and raise by a percentage point next week and another percentage point later on, because believe me that will drive the economy into a recession and you'll get the rest of that cpi growing by less than 1% quickly. you'll be back down to 2% inflation. stuart: you don't think he's going to do that? >> i doubt it. i think next week three-quarters of a percentage point that brings us up to i think 3.1% for fed funds, highest since 2007. what concerns me, right now, is that the futures market is telling me fed funds futures,

that by the end of the year, fed funds is at 4.4% and i really have doubts as to whether or not this economy is going to be strong enough to shoulder a fed funds rate of 4.4%. stuart: you're predicting a recession with inflation. i think that's the way it is. >> that's what we will be looking at next year. stuart: john lonski, quite a forecast, see you later, john. >> thank you. stuart: don't forget to send in your friday feedback. you can e-mail your questions, comments, critiques, whatever, to "varney"viewers@fox.com. president biden heading to motor city pushing the shift to electric vehicles at the detroit auto show. are consumers on board with that a live report from detroit, next ♪ ♪

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stuart: the detroit auto show is underway, it will spotlight the growing number of electric vehicles. grady trimble joins us. with more ev's coming on the market, grady, is there any chance that prices will come down? reporter: not in the near-term,

stuart. in fact the average electric vehicle price actually went up a little less than 2% from july-to -august. it's not just ev's here at the show. it's also hybrids like this one, this is the jeep wrangler 4xe. you see it has about 25 miles, i believe, on the charge, and then that combustion engine kicks in. there is the grand cherokee and just like the fully-electric vehicles, the starting prices for these are pretty high. in the mid-to-upper 50's. take a look at the average sale price for a new fully-electric vehicle. that's above $66,000. its gone up more than 15% in the last year, but, chevy just unveiled its equinox ev. it's at a lower price point and they say that's a game changer. >> we're going to start right around $30,000, which is a price point that nobody else has touch ed, with this kind of package. we think we've got a very compelling vehicle. its got the right size,

technology, and features to be able to have a major impact in the compact suv segment. reporter: president biden will be here at the auto show in just a couple of hours. he's taking credit for the automakers investing more in electric vehicles, but the fact of the matter is that those investments were well underway before he even took office, before the so-called inflation reduction act was passed the bipartisan infrastructure law, but that's not to say that the automakers don't appreciate that help from the government to expand charging and give those tax credits to people who buy hybrid and electric vehicles stu? stuart: they will take the money grady trimble, back to you later thanks very much, grady. we're looking for a bounce on wall street after yesterday's huge sell-off. i don't call that much of a bounce. dow is up 70, nasdaq is up 25. still ahead, liz peek, john ohur ley, the national dog show guy, martha maccallum will be with us and so will i with senator joni ernst, the 10:00

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stuart: good morning, it is 10:00 eastern, we better get straight to the money. we were down so much yesterday we went to see if we recovered at all. not by much. the dow is up 85. it was down 1200 yesterday, the seventh worst point loss in history and the nasdaq is struggling to come back 50 points. the 10 year treasury yield, was up 344, still elevated treasury yield level. the two year is above 3.5%, moving on 4%. the price of oil $88 a barrel, 89 today. bitcoin not an inflation hedge, $20,000 per coin. now this