Yesterdays speakers, maryland congressional candidate, kim klacik she is an internet superstar. All that on making money. Charles i think something profound happened to jer role powell during the two weeks when the Federal Reserve hiked rates, december 20th, 2019. It was the ninth Interest Rate hike of 2015 after essentially the fed went for seven years to zero percent. Powell was driven to some event days before christmas and hit a big pothole. As the driver looked to work out the flat tire, he saw a homeless woman panhandling money from complete strangers. He thought about his policies about runaway inflation that had yet to materialize. It was the old Federal Reserve playbook to slowdown the economy, something that hadnt reached the economy. January 4th, powell made comments not mention the plight of the women, he admitted to a epiphany. He changed course in history. I think he changed the course of the Federal Reserve, saying a strong jobs market, rising inflation does not rise concerns or raise concerns to high inflation. The fed did aboutface cut rates three times in 2019. This year the covid19 economy shut down the economy, with two massive rate cuts back in march, taking a roundtrip to the lower number back in december of 2015. The Federal Reserve must present sort of venture, this veneer, at least the chairman this veneer of calm, whenever he or she is anxious or scared to death. Not other mem benches the fed. Most notably fed president John Williams pounding the table about the deflationary crisis, although the fed prefers to call it a lack of inflation. Late in the day news broke that jerome powell, is set to deliver a profoundly consequential speech at jackson hole on thursday this is the virtual version of it, with the aim to allow inflation to rise above the target for a long period of time. It is being compared to the dramatic efforts from paul volcker to arrest inflation in the early 1980s. This time it is set to spark inflation or better yet stave off deflation. It takes several dots to see how homeless woman with children will benefit from lower rates. But they have a better chance in an economy driven by investment and confidence in the stock market. Certainly better than the alternative. I want to get to the perspective from two brilliant, two of the most thoughtful market pros come on the show from time to time. Bny mellon chief investment strategist, Alicia Levine and Divine Capital dani hughes. This powell fed gets a lot of grief from a lost folks because theyre pumping up assets. There is concern from the fed there is deflation out there. This is what roiled the Global Economy during the great depression, but once it starts it is hard to stop. Is it justified. Well while wouldbe hearing about starting on thursday that inflation has been real slow to get to the 2 fed target. In part what you spoke about, charles. The fed was always raising rates because inflation would get there but never got it. If they let inflation rise above 2 . Better for the economy. Cheaper credit means businesses can borrow. And that will also ultimately help the person on the street that you just spoke about. Better business, better economy, good for everybody. Charles right. You know, dani, you listen to jerome powell, some other members of the fed, we know they have a dual mandate with employment and inflation but it feels like they have this newfound mission to perhaps help a homeless woman and her children. Im not sure fed policy can do it, it sounds like powell will do something very dramatic on thursday . Well, that is what were hearing, charles. His profoundly consequential speech will likely aim to juice inflation as alicia said and keep rates anchored at or near zero to throw inflation number out the door to spur growth. But there is a lot of worry that well be like japan which fought a 30 year battle with inflation and slow growth. They havent seen a new high since 1989. They have a low return environment. What i am concerned this creates a debt trap. The ones who need it least like corporations, issuing debt and liquidity. By no means encourages banks and Financial Institutions to lend to the middle class, to the Small Businesses that have been whacked so hard by this pandemic. Charles you know, danny, i want to extend my thesis on the social ills and what the fed may think they can do with this. I think if President Biden would have a mary daily lead the fed, if she wasnt in charge of the fed, they may even buy student loan debt, i could see a progressive fed. Could that be possible . I think anything is possible. We learned this fed was going to possibly buy etfs and stocks but the unintend consequences of the fed mandate to create those settled Financial Markets which is what we want, may make the economy seem better than it is. So for example, vehicles and office space, were starting to consider as a society theyre not really a premium anymore. How do we pivot and work on a world likely to emerge . I think that what daley message is, it is proactive, it is forward thinking. I think theres a place for that going forward. Charles alicia, you know, i certainly not farfetched considering the efforts to bail out big banks and big businesses. We know what is in the political air. I dont think it would be too farfetched to have a joe biden presidency give the green light to the Federal Reserve to start doing things like buying student debt. Would you have opposition to that . So i think what dnai said is really true. We were all shocked this year when the fed started buying Corporate Credit and high yield and thought about buying equities, etfs as well. This was all a red line we never thought was going to cross. Will remind everybody that there is a divide between the political and the fed and it is not easily crossed and we definitely have seen some resistance to some of the desires of the administration this time and i suspect you will see it next time as well. Charles right. I dont think it will be a simple Straight Line but it is clear that the fed is going to places that it has never gone before. Charles well, certainly has and i think it is going to keep lurching in that direction. Now for the other big story that broke out after the close today, the shakeup of the Dow Jones Industrial average. Three names going in, three names going out. Some are shocking but not really surprising per se. A lot of focus on need for more tech after apple split which obviously gives it less influence and the index but kicking exxon out almost after a century you know scores the storyline. I want to bring in on the conversation, capital wealth chief planning strategist jeff saut. Jeff, how smart is this move . Should it have happened a long time ago. Charles, they changed the components of the dow off and on 50 years ive been in the business. I have keep getting the question, youre one of the few people that interprets dow theory, does this impact dow theory. The fact of the matter it hadnt at least thus far. There was a dow signal sell december 23rd in 1999. Buy signal in june of. There was a dow theory killer in december of 07. Charles jeff, to that point. I realized it was seven years they made the last changes. As far as this index being quoteunquote the market or a good reflex of the overall market, think about it, the s p, they made a brilliant move. They created the Communication Services sector a couple years ago. So you have these megacap names like google, facebook, netflix. Should the dow include Something Like that to be more reflective where society is . Yeah. I think it should actually. I think google should be included but when you talk with professionals like you and me. We dont really reference the dow. We reference the s p 500 because it is much more representative of the overall market. Charles sure. Hold on one second, jeff. I want to bring back dani and alicia. Get your theory on the and jeff concurs, maybe something from the new communications Services Sector should be added as well . When you take a look at the dow 30, which is 30 stocks, really the only Communications Name that jumps out at you is verizon. You could look at apple. Could you look at microsoft. Both are on the communications company. Companies that we consider to be Communication Services like facebook and google are on there. The dow is always quoted. So is the s p but the s p is really tracking so much more assets, 11 trillion versus the dows 31 billion. Charles right. So great big divide between these two indexes. Charles on that note, alicia, i do believe that if the dow gets to new highs, when it goes positive, everybody sitting at home who dont necessarily watch financial tv will see that and as it approaches new highs i think the individual investor will become more bullish. Your thoughts . I definitely think that there are two things that are really dry powder for todays market if there are new highs. The first is that most flows have gone into the bond market and not equity market by a factor of five to one. There is where people can get the cash from. The second thing, close to five trillion dollars in cash sitting on the sidelines. So that is where you get your dry powder from. I do think that as markets move higher and get through the wall of worry, and as case count in the u. S. Isp dr. Ing, lets not forget that, were getting improvement in covid cases over the last four weeks on a moving average. If cyclicals are going to start moving, the real economy stocks are going to start moving and you will bring people in as they begin to feel better as well. Charles all right. I dont have a lot of time but i want to go around the horn here. Go back to you, jeff. Some. Things youre looking at, the yield curve is one thing of the at least the 10yearyearold, i love the action there. Were talking about bringing money off the sidelines. What do you think makes that happen and where should people be looking, jeff . In the long run the stock market is all about earnings. In the short term, intermediate, fear, hope, greed loosely connected to the business cycle. Three or four weeks ago i said on your show i think equity markets are getting ready to go vertical. That is what happened. I think well see a shortterm trading top next week within the construct of a secular bull market that has another five to seven years left in it. Charles i pulled up a chart yesterday. I saw the spike, it said the jeff vertical. You did call it. Dani, what do you like here as the vertical gets more vertical before we get a shortterm top . There is a lot of names easy to like in the market still. I would bring up at t. Great dividend payer. I love their cash flows. Theyre the kind of company in very unsure environment they will continue to drive cash. They might be a great addition to the dow as well. Charles all right. Lets leave it there. Jeff, alicia, dani, i love these thoughtful conversations. What the fed does, it helps assets, theyre trying to do something maybe beyond their reach that will drive policy for a long time. Appreciate it. Despite new thinking from Top Economists and Health Officials joe biden says he is more than willing to shut down the economy to stop the virus if he is elected. Peter morici well ask him about the ripple effects that would have . She is indeed a rising star in the republican party. Next, maryland congressional candidate kim klacik debut and her bigger internet view. She is a superstar. Well be right back. The democrats controlled this part of Baltimore City fore50 years. They have run this beautiful place into the ground. We want a chance to get ahead, not just get by. That is what President Trump promised. That is what President Trump delivers. Tara, did you know geico is now offering an extra 15 credit on car and motorcycle policies . Wow. Ok thats 15 on top of what geico could already save you. So what are you waiting for . Idina menzel to sing your own theme song . Tara, tara, look at her go with a fresh cup of joe. Gettin down to work early following her dreams into taxidermy oh, its. Tax attorney. I read that wrong, oh yeeaaaah geico. Save an extra 15 percent when you switch by october 7th. Give it up for tara when you switch yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. It seems as if the democrats no longer view the governments job as protecting honest citizens from criminals but rather protecting criminals from honest citizens. It is almost like this election is shaping up to be church, work, school, versus rioting looting and vandalism. Charles well the first night speakers at rnc painting a picture of disarray and destruction if joe biden were to become president. The message resonating with voters fearing for their safety amid a spike in crime amid big cities. Maryland congressional candidate kim klacik joins me. This is one of your essential themes since you decided to run for office and its a message really driven home with that extraordinary video that debuted a couple weeks ago. Lets go back again to what made you want to run in terms of just, the erosion of Great American city, baltimore and now, were seeing other cities facing the same issues . Absolutely. Thank you for having me, first of all, charles, i appreciate it. In many cities, it is not unique to baltimore like youre saying, we see a lack of law and order, number one, and number two, a lot of crime and violence come from the survival course so many people are on within these communities. You know, Baltimore City we have crime, violence. The homicide rate is 10 times the national average. The poverty rate is 20 . We have a bad education system. So you know, with my platform i talk about School Choice which a lot of parents in the west baltimore area, which you see in my videos are for. We talk about law and order. That is why it was so important for me to add in that campaign ad that there were a lot of people on the ground just do not support defunding the police. We are down Police Officers right now in the city. We probably need more funding because we need to recruit more and train more. I say, it is, the left if they have a problem with the way Police Officers are trained today, you would have to need more funding to better train them. So to me, these progressive policies that we seem to be taking control of the lefts narrative, makes no sense at all, hopefully with my run i can bring some sense of normalcy. Charles right. You know, unfortunately, you know, to your point with the training, particularly when it comes to arresting and detaining i think that is where there is a real serious issue and then of course, the aftermath of these things. It is so interesting because you do point to the democrats. You spoke about this last night and how they have been running these big cities for decades. I want to run a little bit of that with the audience, then come back to you. The democrats have controlled this part of Baltimore City for over 50 years. They have run this beautiful place right into the ground. Abandoned buildings, Liquor Stores on every corner, drug addicts, guns on the street, that is the norm in many neighborhoods. Sadly the same cycle of decay exists in many democrat run cities. The democrats still assume black people will vote for them. Charles i want to talk about the cycle because were seeing cities come back from the brink that have been doing very well. They slowly fade. Good example, in new york city, one day in july, 50 windows on one line of trains were smashed. Then a week later, 60 windows were smashed, right . This is how it begins, the cycle begins. How do you intervene . Your platform, talk about School Choice and other things. How else can we intervene to make sure cities dont crumble . I believe that is the proverbial snowball boulder and can happen overnight . Absolutely. People that know anything about Baltimore City, you know that the city was once a manufacturing powerhouse, right . So i talk a lot about the fact that we had to rely on other countries for ppe during the coronavirus lockdown. We can bring so much more, especially that billion dollar medical Equipment Industry in through the baltimore port, considering we have the second largest port in the country and it is underutilized. We see connecticut they use their very well. They have submarines. They are doing wind energy. Things that we could do but unfortunately you know, we have people in office dont do anything. They dont make it any better for people around them. Charles right. Many federal funds come into the area in 2015 after the riots. President obama and Elijah Cummings secured millions of dollars for the penn north corridor but you wouldnt know that by looking at my campaign ad. That is where i was. I was in the penn north corridor in 2020. So you know, there is a lot that we can do. Just a matter of someone wanting to do it. Weve been under one party rule for over 50 years and that has devastated the city. Charles yeah. Interest is no doubt about it. Kim, youre certainly becoming a superstar. I put a lot of people on, blew up and forgot about me. Hope you dont do the same thing [laughter] i will never do that. Never. Charles good luck with e