joining us for aiotrategy se is jim paulson. good to see you, jim. thanks for joining us. >> good to see you, sue. >> we have seen twists and turns and volatilityal in the first of the year, do you expect that to continue? what does the market complexion look like to you? >> i kind of do. i think the primary problem all year from my perspective has been the bond yields have been too low, and stock valuations hihave been too . and we're doing a job on that, you know, we raised yields now, they lot better than they were when we came into the year. the valuation of stocks have come down while earnings have gone up. we have me of thato do yet, and in the second half, i think we're going to struggleith maybe a little slower economic growth which cou challenge wall street earnings estimates a bit, but the problem is, it might not slow enough to really stop the fed from continuing to raise interest rates orwa stop and consumer price inflation from continuing to rise. we may have a stayflation about i'm not looking for a bear market. i don't think that's the

>> all right, kayla, thank you very much for the update let's bring back jim paulson, as better than nnckinney -- we're monitoring the impact on the economy, jim just told us it's more headline risk do you agree are we at the point where we could see some real economic impact in terms of consumer prices and exports >> i think in the long-term you definitely could see an impact in the near term, a lot of what we have had, we have had a tug of war, really in the u.s., very strong economic fundamentals, we have broken out of the earnings recession in a very big way. on the other side of the tug of war, you have a lot of political headlines, such as trade wars, concerns about populist elections. and with respect to the trade -- with respect to the concerns about trade, it's something that definitely could push up consumer prices, it's something that consumers are probably going to feel the impact because consumers are stagflationa stagflationary, they pull off that trick of cooling down the economy at the same time overheating prices and i think that's something that will be spread across

he takes a little bit, maybe a little bit of exception with what steve has just reported jim paulson is chief investment strategist with the -- he says the real risk faced by investors is not excessive overvaluation, but the potential for recession. jim, welcome you are not predicting a recession. you look at four sort of variables that have pointed that direction in the past, and none of them seem to be lined up squarely aiming at a recession, but another variable that you are concerned about is what is known as the earnings yield. what is it what is it telling you why is it important? >> well, the real earnings yield has had a pretty good track history for the post-war period, tyler, of kind of giving you an idea of future return potential. right now the real earnings yield has fallen right to the cusp of its lowest quarterile of post-war history, which is getting into over valuation territory, no doubt. i do think the market is highly valu valued. >> you say nearly 85% of bull markets since 1945 ended when the real earnings yield was in the first or second quarterile and currently

jim paulson was an investment banker the firm has transformed itself into a trading form. >> you have gus l levy who actually transformed it into a powerhouse. both halves of that brain were co existing peacefully after going public, he exploded both sides of that brain, and frankly it was people, you know, after the financial crisis when the regulations came in and they said, guess what, guys, we can't do that anymore. now, you could decide whether that's right or wrong, but that left a lot of brain drain at goldman sachs. >> william, if they're already being treated as a commercial bank as they have all this time and regulated as a commercial bank, what are the implications for the stock with these changes? is it kind of good news that they're embracing this and kind of fessing up to what's happening here >> they have no choice but to embrace it, if you ask me. let me look at what jp morgan stock has done it's on fire so goldman sachs could only wish it was on fire the way jp morgan is it doesn't have the balance sheet that jp morgan has, it doesn't have the revenue stream. >> how f

let's turn back to our guest host today jim paulson.t's tweet and how it plays into what contessa was telling us about the farmers and the trade. that's a lot for markets to try to assess and figure out how to handle them. >> i think one of the biggest things at the moment might be the dollar which president trump commented on i don't disagree with that i think the collapse in commodity prices we've seen, not just in soybeans but nonenergy prices have collapsed in the last 30 days ting dove tails in the rise of the dollar. >> he points out we're raising rates while others are lowering rates. we lowered rates first. >> i concur. i think we've got to -- the inflation rate on cpi is one of the highest. the core rate is going to break out to new highs for the recovery oil is three-year highs. i think there's a reason to do it at a 4% unemployment rate it doesn't mean there won't be fall out one of the fall outs is economies slow. >> maybe so. one of the causes of a rising dollar is u.s. growing faster than the rest of the world >> exactly.