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Jacob: I rarely say this, but we got a really hot take on the Fed. Sarge, what is it?

Sarge: All right. The Fed has to understand it. They'd been a little slow on the take for a long time now, but they have to understand this is not about economics, right? This is about fighting a currency war and this is about repairing the yield curve. The Fed must not consider taking a break on cutting the short end of the yield curve. The long end of the curve isn't going anywhere. We know the spread between the US 10 year and the German 10 year stands between 230, 240 basis points at all times. You saw it this morning, the German 10 year moved and so did ours. That was for no other reason. It was because the Germans moved, right? We have to be prepared to fix our yield curve because that's the only way the purchasing managers are ever going to spend on hardware and even software. That's the only way we got our cap x back in line. So we have to fight, we have to fix the yield curve and we have to fight a currency war. If you haven't noticed, the Chinese have demonstrated, they've demonstrated control this week over the Nasdaq composite and over the S&P 500. if that's not letting us know that they can hurt us, then I don't know what is. And if somebody is going to hurt you, you better put up two fists.

Jacob: All right, but how much more can the S&P 500 up 18% year to date, continue to go higher? People expect more rate cuts.

Sarge: Well, because we have extremely dovish signaling from the BOJ and from the ECB. Yes, the world is, we are going to deal with higher evaluations. I know the hard money guys and how they feel. In fact, I'm technically a hard money guy myself, but we are going to have higher valuations. And TINA, remember TINA, there is no alternative. She's gonna show up again and she's going to reintroduce herself. All right. The 16.8 times forward looking earnings that we have right now, which is only slightly above the five year average of 16 4.5 times.

Jacob: Much higher then a 10 year average.

Sarge: We're not, yeah, that's about 14 something. But I mean, we're not that much higher than our five year average. And if we're going back into that environment with low rates and with the potential for flooded money around the world, even if it's not from the Fed, well then we're going to get back up to that 17 or even 18 times valuations.

Jacob: All right, so real quick for the rest of 2019 how much more percent-wise is the S&P 500 have?

Sarge: With, with the president setting up September, the meetings with the China, with the Chinese side, with the Chinese celebrating the 70th anniversary of their big communist victory in 1949 in October, nothing gets done til October. The market will remain extremely volatile for the next two months.

Some economists and strategists have told TheStreet interest rate cuts are an inappropriate way of spurring economic growth lost to the U.S. China trader war. 

Some have said the Fed needs to maintain its ammunition for when the U.S. hits a recession. 

Sarge Guilfoyle, veteran trader and RealMoney contributor says the Fed needs to keep its head down on rate cuts, without any deviation from that path. 

"The Fed has to understand it," Guilfoyle said. "They'd been a little slow on the take for a long time now, but they have to understand this is not about economics." 

Guilfoyle added:

"This is about fighting a currency war and this is about repairing the yield curve. The Fed must not consider taking a break on cutting the short end of the yield curve. The long end of the curve isn't going anywhere. We know the spread between the US 10 year and the German 10 year stands between 230, 240 basis points at all times." 

"We have to be prepared to fix our yield curve. That's the only way we got our cap-ex {capital expenditures} back in line. So we have to fight, we have to fix the yield curve and we have to fight a currency war."  

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