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you a little money because everybody keeps asking what does the FED really want after a tough day where the Dow slipped 340 points as we lost 1.16 and the NASDAQ tumbled 1.47 so lower than expected jobless claims and a much stronger than expected ADP private payroll support well this is something that you and I need to address we got to figure this out so on the eve of tomorrow's key non-farm payroll report they want to see a spike in unemployment they want to keep do they want to see you make less bus money do they want to plummet in wages do they want millions of people thrown out of work in a ruined economy no not exactly the feds they got a plan they want you to reach for this pizza not for this pizza they want you to buy this coffee not this coffee foreign cheese not this cream cheese not disappear they want you to buy these chips not these chefs nuts how about this they want you to well forget these they want you to buy these yeah they want you to trade down they want you to save money you add the prices of the name brand Goods here you know what you know how much it costs 52.11 how about the the donut the nice the nice the generic brand just 25.59 what a difference see if people are all to switch to the generic it would force the Branded guys to cut price and that that is what they want to have happen that is their plan that's how the FED can beat inflation but they don't have many tools to change it so you suddenly decide you know what I want some nice roasted party peanuts not the planters see if many people feel confident and go for the high price basket the FED loses if they want consumer spending less if they want them to buy this stuff they have to make you so worried about losing your job or at least not getting a raise or heaven forbid get fired as part of a reduction in force see as long as we have a strong labor market there's a good chance people will keep paying up for the high quality stuff that's what they're going to do including this beer made by consolation Branch by the way the worst performing stock in the s p today more on that later when we speak to the CEO Bill Newlands hey what's the matter with one laugh on a really miserable day one laugh give me a break as long as consumers can afford it producers will keep raising prices to produce profitability hey that's what happened with ConAgra they make this stuff yeah the package group company that had terrific sales and earnings even as the volumes that climb more than eight percent why price increases nobody stop buying this stuff they're still buying it they don't care they're paying now the FED isn't necessarily targeting cream cheese or potato chips it's trying to break the cycle of inflation these Supermarket items are a microcosm of the Border economy once people start trading down the cheaper knockoff versions the major brands will not be able to get away with endless price increases let me tell you something you want to see endless price increases this stuff is there any level of stuff this doesn't stop it doesn't stop going higher I'm singing in my that was bad that was bad I thought I was at my old set for a second um anyway okay I'm um do the same oh that was really bad you could do the same analysis of real estate the FED wants you to stop paying up for luxury or maybe to just stay put in your old home rather than buying a new one that's the big ticket version of buying the cheaper knockoff cream cheese that I just threw and ruined that ten thousand dollar camera that I'm gonna have to hear a lot about tomorrow that's the big ticket version of Buy yeah well anyway I think we're definitely hey whoa I think that's definitely where we're headed especially with much higher mortgage rates same server for cars the number of people the monthly car payment of more than a thousand dollars has now reached a record high better to stick with their old car even if it's a jalopy mine's 16 years old I'm not going to get a new one plus unlike food the feds make it more expensive to get financing for these bigger ticket items so housing and cars should be under a lot more pressure so far home sales are way down in volume but not price not yet history says that happens next car sales haven't rolled over yet but at these financing rates it's about to happen and while the FED isn't in there making cream cheese more expensive you can definitely feel the pinch if you look at the interest rate on your credit card why does all this matter what does it mean so you buy these peanuts or some other what does it mean well because tomorrow we get a non-farm payroll number and if it doesn't show high on Empire unemployment with no wage growth the FED will need to keep aggressively in raising interest and you're going to eat these which by the way just one second I want to check something I I I have a brainstorm yay don't they look a lot like these anyway that's the point see while we're making progress fighting commodity inflation the fed's most concerned with wage inflation because wages spread through the whole system and they've made no progress on wage inflation we've still got a massive labor shortage as long as that continues the FED will keep ratcheting up rates until uh actual businesses like the supermarkets forget about raising wages and start laying people off on mass like we've seen in the last 24 hours with Salesforce and Amazon I know that sounds harsh but fighting inflation is tricky initially we get a worldwide wave of inflation because Supply chains were messed up by code remember that we didn't have enough logistical capacity in the global economy bounced back but once those supply chain snap things got solved inflation didn't come around it stuck around companies didn't have to cut prices because employment was so strongly the consumer could afford to pay more every time they tighten the fed's been hopeful that you'll finally switch to the cheaper knockoff Branch before see everybody else to cut prices lots of people worry that that that's exactly what happened to to Modelo right which is why consolation parent got its parent got crushed today I mean they're they're thinking you're going to switch to to Natural Ace the big one no all right that's not the impression I get from the quarter or the comical but let's save that for later when we speak to CEO Bill nuance in the end all this is a hypothetical uh theoretical kind of thing and you know I hate hypothetical I hate theoretical what you need to know is that when consumers decide to trade down companies like ConAgra constellation right at the lower price and that's how we beat inflation and while that kind of thing is great for consumers it's terrible for you the shareholder same way with lower home prices it's good if you're looking for a house but it's awful if you own shares home builder Lennar in other words there is no free lunch for you the investor you can rent the supermarket or the car dealership or the housing development but that means you're going to lose in your stock portfolio worse some would say the fed's actually targeting your stock portfolio itself because they know people will spend less money when they feel less wealthy maybe retirees we even come back to the workforce if they see enough damage in the stock market portfolio the fed's basically trying to create Financial insecurity because that's the only tool they really have to beat inflation if they make people feel more insecure maybe that'll help drive down the cost of Labor a more benign way of getting a bigger lay favorite pool compared to mass layoffs obviously it's not great that the feds doing it this way but it's really all they can in fact it's just plain dismal hence the scientific name for economics nobody wants to root for layoffs or lower stock prices but the alternative is persistently High inflation endless price increases for everything nobody wants that either especially the people not wealthy enough to own a lot of stock and that's Millions upon millions of people now the hope is the Fed can beat inflation without raising the cost of borrowing so high that nobody buys much of anything we will hunker down stop traveling stay at home subsystem knock off store brands if that is much hesitating that too much we get tons of layoffs in the genuine recession that's called the hard Landing salt planning that comes from Price stabilization the job market cools layoff Spike prices hold but no matter what unless companies get more productive if they make they'll make less money than we thought is that what happened to Constellation Brands we will find out is that what's happening in Tesla Walgreens workday we need to know as always I finished the show with there's a bull mine Rocket summer and right now that's in the recession group drug stocks but you know what maybe they're only recession resistant not Recession Proof we got to speak to Lisa Gill high respected Health Care Services analyst from JP Morgan later in the show on the eve of her mayor Health Care conference the bottom line though right now it does seem like there's just no place to hide except treasuries if this keeps up the Federal indeed win its World inflation the hard way and if you own stocks your best hope is that they win sooner rather than later let's speak to Gora gaurav in Massachusetts go rob hey Jim happy New Year uh first time caller and a member of the investing Club um thank you thank you I started listening to your show about two years ago and since then I haven't missed a day uh thanks to you and your amazing team for what you all do day in day out um I have a question on FedEx I know you have the new CEO Raj on your show a couple of quarters ago I bought the stock in August 2021 at 276 dollars this year my question to you is that me being a long-term investor what do you think if I should hold on to the stock that has a dividend I think you should buy more go rob I want you to buy more I think that they have a CEO that this Rod subramanian is doing such a good job it's a tough environment you're thinking long term and that means buy not sell not hold fed X core all right right now seems like there's nowhere else to hide the treasures if this keeps up the FED will win its quarter inflation but that's the hard way oh man money tonight constellation Branch as I said fell one Higher it's expenses in the company's beer division a lot of other little things other foundations here I mean that stock was down the most of it yes B then it was tough to find them but out of last year's NASDAQ winners is there anything worth owning I'm gonna give you a handful of names I'm watching and ahead of the JP Morgan healthier conference I just mentioned I am talking to Lisa Gill to find out what we should be looking for so stay with Kramer
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