Consumers are being 'resilient,' Jimmy Lee says

JACKIE: IT'S TIME NOW FOR THE WORD ON WALL STREET, TOP INVESTORS WATCHING YOUR MONEY. JOINING ME NOW WEALTH CONSULTING GROUP CEO JIMMY LEE, ALSO WITH ME IS MARK TEPPER. JIM MIXER LET'S START WITH YOU ON THIS ONE, TAKING A LOOK AT FUTURES RIGHT NOW AND WHERE THE MARKETS STAND. OBVIOUSLY THIS MOVE YESTERDAY TO BUY BACK LONG-TERM TREASURIES BY THE TREASURY DEPARTMENT SENDING YIELDS A LITTLE BIT LOWER, LIFTING THE STOCK MARKETS. IS THIS A TREND THAT YOU EXPECT TO SEE LAST OR WAS IT JUST A SHORT-TERM FIX? >> WELL, I THINK IT'S ACTUALLY A SHORT-TERM FIX BUT IT'S A GOOD SHORT-TERM FIX AND WITH IT SHOWING THE INVESTOR COMMUNITY THAT THE TREASURY HAS TOOLS TO BE PROACTIVE ABOUT WHAT'S GOING ON WITH YIELDS AND I THINK THE LONGER TERM INVESTORS ARE MORE CONCERNED ABOUT THE 40 TRILLION OF NATIONAL DEBT THAT WE HAVE. JACKIE: WE CROSSED THAT LINE AND THAT IS BREAKING NEWS, NOT THAT WE WEREN'T EXPECTING IT. CAN I JUST ASK YOU ABOUT MODERNA AND MERCK, THEY'RE A LITTLE LOWER THIS MORNING BUT THEY HAD A BIG RALLY YESTERDAY LEADING THE MARKETS, THEY ANNOUNCED A TRIAL SUCCESS ON A NEW MELANOMA VACCINE, MODERNA SOARING NEARLY 177%. IT WAS THE BEST DAY ON RECORD. ALL THIS AS WE'RE WAITING FOR WALMART'S SECOND QUARTER EARNINGS OUT AT THE TOP OF THE NEXT HOUR. WHAT DO YOU THINK? >> CERTAINLY, I MEAN, I THINK WE'RE GOING TO SEE SOME AMAZING ADVANCEMENTS WITH MEDICINE AND THAT NEWS WAS PHENOMENAL FOR PEOPLE, ALL OF US. AS FAR AS THE CONSUMER, WE HAD A SOFT REPORT IN JULY THAT I DON'T THINK IS REALLY REPRESENTATIVE OF HOW RESILIENT THE CONSUMER REALLY IS. AND THAT'S VERY IMPORTANT BECAUSE NEARLY 70% OF GDP IS DUE TO CONSUMER HERE IN THE UNITED STATES AND CONSUMERS ARE STILL SPENDING AND THEY'RE BEING VERY RESILIENT AS I SAID, EVEN WITH HIGHER GAS PRICES AND SO IF WE CAN GET OIL PRICES TO COME DOWN, WE CAN GET THE WAR TO GET RESOLVED, THEN I THINK WE CAN POTENTIALLY GET CONSUMER CONFIDENCE TO GO UP AND MAYBE GET SOME ANIMAL SPIRITS AND FEELING LIKE THAT AND I BELIEVE WE CAN GET NEW MARKET HIGHS, MAYBE EVEN MUCH HIGHER THAN WE'RE AT TODAY. JACKIE: LET'S TAKE A LOOK AT WHERE WE STAND WITH YIELDS THIS MORNING. HAVE YOU THE MOVE BY THE TREASURY YESTERDAY THAT LIFTED THE MARKETS. FED MINUTES WERE OUT. THE INDICATION SEEMS TO BE A HIKE WOULD BE NECESSARY IF THE SITUATION OVERSEAS ISN'T RESOLVED BECAUSE OF WHAT IT'S DOING TO OIL PRICES SO THE YIELDS ARE SLIGHTLY HIGHER THIS MORNING, 4.67 ON THE TEN YEAR, 5.2 ON THE 330 YEAR. THE NOTION -- 30 YEAR. IT'S TRANSITORY TO A POINT. WE SAW PRICES DROP WHEN THE MARKET THOUGHT THERE WOULD BE AN END IN SIGHT FOR THE IRAN WAR. BUT THEN THAT REVERSED WHEN THE MARKET START TODD REALIZE THAT AT LEAST IT WASN'T IMMINENT. HAVING SAID THAT, THE FED CAN STAND AROUND AND SAY IT'S TRANSITORY. THE LONGER IT GOES, IT'S HARDER TO MAKE THAT ARGUMENT. WHAT DO YOU THINK KEVIN WARSH IS GOING TO DO ABOUT THIS? >> FIRST THINGS FIRST, I DO NOT BELIEVE IT'S TRANSITORY. WE ACTUALLY CHANGED OUR INVESTMENT POSITIONING TO ASSUME 80 PLUS DOLLAR OIL FOR THE FORESEEABLE FUTURE NOW AND ONE OF THE THINGS WE'VE DONE IS WHEN IT COMES TO THE STOCK SELECTION THAT WE INTEGRATE INTO OUR PORTFOLIOS, WE OWN UNION PACIFIC RAILROAD BECAUSE WHAT WE'RE SEEING HAPPEN RIGHT NOW IS YOU ARE SEEING LESS FREIGHT MOVIE YA TRUCK ON THE HIGHWAYS BECAUSE OF THE COST OF DIESEL IS SO HIGH AND MORE FREIGHT IS MOVING VIA RAILROADS. THAT'S PROBABLY THE NUMBER ONE THING. KEVIN WARSH, HE'S GOT A TOUGH CALL HERE. THIS IS NOT EASY. THE ECONOMY IS DOING INCREDIBLY WELL BUT IT'S DOING INCREDIBLY WELL BECAUSE OF A.I. CAP EX. THE CONSUMER, IT'S KIND OF A BIFURCATED CONSUMER. YOU'VE GOT A VERY STRONG HIGH INCOME CONSUMER AND A WEAKENING LOWER INCOME CONSUMER. THAT'S CHALLENGING. WE'LL FIND OUT MORE ABOUT THAT WHEN WALMART FLOUTERS A BIT. PROBABLY THE MOST IMPORTANT THING TO KNOW IS THAT AS YIELDS HAVE CLIMBED FROM 4% TO 4.7-ISH PERCENT, WE'VE SEEN THE MULTIPLES IN THE STOCK MARKET HAVE STOPPED EXPANDING. THE MARKET MAY BE UP 11, 12% SO FAR THIS YEAR, MULTIPLES HAVE STOPPED EXPANDING AND WHEN YOU LOOK AT A GREAT COMPANY LIKE NVIDIA, THE FORWARD MULTIPLE A FEW MONTHS AGO WAS 21. THIS IS AN EARNINGS DRIVEN RALLY. JACKIE: THE COMPANIES ARE MAKING REAL MONEY. THIS IS NOT LIKE 1999. BUT JIMMY, YOU HAD MENTIONED THIS 40 TRILLION MARK FOR THE NATIONAL DEBT. THAT IS, YOU KNOW, ASTRONOMICAL WHEN YOU THINK ABOUT IT. WHEN YOU THINK ABOUT BORROWING COSTS AS WELL, OUR INTEREST EXPENSE IS VERY HIGH RIGHT NOW. I KNOW THAT'S SOMETHING THAT THE PRESIDENT THINKS ABOUT AND LOOKS AT. INVESTORS ALSO LOOKING FOR GREATER RETURNS ON GOVERNMENT ISSUED BONDS. WHAT DO YOU THINK IS GOING TO HAPPEN FROM HERE? BECAUSE I GUESS WITHOUT ANY RESOLUTION OR ANY CHANGE, NOT KNOWING WHAT THE FED EXACTLY IS GOING TO DO, I WOULD EXPECT THE MARKET TO CONTINUE TO MARCH HIGHER, MARK, TO YOUR POINT ON A GOOD EARNINGS PICTURE BUT THERE'S STILL WORRY OUT THERE AND AS LONG AS THERE'S WORRY AND A LITTLE RISK YOU GET LITTLE RUNS UP AND A LITTLE BACKING OFF, PROFIT TAKING, WHATEVER. >> WELL, WE'RE DEFINITELY IN A TRADING RANGE RIGHT NOW. THIS YEAR IT'S BEEN EARNINGS, I THINK JOBS HAVE BEEN RELATIVELY FLAT SO IT HELPED COMPANIES WITH MARGINS WHICH IS A GOOD PART OF THE EARNINGS STORY. I THINK THAT'S A GOOD THING AND INVESTORS ACTUALLY GOING OUTSIDE OF TECHNOLOGY, I THINK THE MARKET IS GOING TO ACTUALLY CONTINUE TO BROADEN OUT, IF WE GET YIELDS TO COME DOWN BUT I THINK THE DEBT SITUATION IS THE BIGGEST PROBLEM FOR LONG-TERM YIELDS. THAT BEING SAID, I ACTUALLY BELIEVE THAT IF THE WAR DOES GET RESOLVED SOONER THAN LATER OIL WILL COME DOWN SHARPLY AND I THINK INFLATION IS REALLY TAME AFTER THAT SO AFTER THE WAR'S OVER I'M A LITTLE BIT MORE CONCERNED ABOUT GROWTH. IF WE CAN GET THE RHETORIC TO CHANGE FROM A HIKE TO POTENTIALLY NO HIKE AND MAYBE EVEN LIKE LOWERING RATES, I THINK, AGAIN, WE COULD GET ANIMAL SPIRITS, WE COULD GET THE MARKET TO GO MUCH HIGHER AND TOWARDS THE END OF THE YEAR BE MUCH HIGHER THAN WHAT PEOPLE THINK RIGHT NOW EVEN. JACKIE: IT ALL DEPENDS ON WHAT THE RESOLUTION WILL BE ON THE WAR BECAUSE I THINK ONE OF THE OTHER WORRIES FOR THE BOND MARKET ALONG WITH THE NATIONAL DEBT AND THE INTEREST EXPENSE IS HOW MUCH WILL IT COST TO FINANCE THIS WAR AND SO THAT'S BEING PRICED IN TO A CERTAIN EXTENT IF THERE'S ESCALATION. SWITCHING GEARS FOR A MOMENT, MARK, I'LL COME TO YOU ON THIS, MARVEL TECHNOLOGY JUMPING OVER 10%, GIVING GOOGLE THE OPPORTUNITY TO BUY COMPANY SHARES. THE DEAL IS GOING TO INCLUDE PRODUCTS THAT WORK ALONGSIDE INTENSE PROCESSING UNITS AND HELPING A.I. SYSTEMS PROCESS STORAGE AND NETWORKING. WHAT DO YOU THINK. >> IT'S ANOTHER CIRCULAR DEAL. THERE'S SO MANY OF THESE, IT'S EXHAUSTING. MARVEL IS SAYING IF YOU BUY MY CHIPS YOU CAN BUY 6% OF MY COMPANY AS WELL. THAT TO ME, THAT'S ONE OF THE REASONS THAT WE'VE SEEN THIS BROADER SELLOFF IN SEMICONDUCTORS AND MEMORY STOCKS OVER THE COURSE OF THE LAST FEW MONTHS. MARVEL RIGHT AFTER JENSEN HUANG SAID THIS WAS GOING TO BE A TRILLION DOLLAR COMPANY IT WAS WORTH 275 BILLION. TODAY IT'S 205 BILLION. SO I THINK INVESTORS HAVE BECOME A BIT EXHAUSTED AT THESE CIRCULAR DEALS. JACKIE: I HEAR YOU AND THAT'S PART OF THE RISK THAT'S OUT THERE AND THINGS THAT MEME ARE E THINKING ABOUT. JIMMY LEE, THANK YOU FOR BEING HERE. MARK, YOU'RE GOING TO SIT WITH ME ALL MORNING LONG. WE WILL BE RIGHT BACK.