Mitch Ehmka Confirmed As Chief Trading Officer For Kingsview Partners

Kingsview Partners is pleased to formally announce Mitch Ehmka has been promoted to the position of Chief Trading Officer. Mitch has worked with Kingsview since 2010 and has assumed increasing responsibility during his tenure, serving as Head Trader for 3 ½ years, and then as Director of Trading for the last five years. His work has proven invaluable to the firm and our Wealth Managers.

In this expanded role as Chief Trading Officer, Mitch will oversee all trading operations within the firm from Chicago and run the day-to-day trading operations of Kingsview Investment Management. He will also continue to sit on the investment committee.

Mitch helps Advisors, fellow Portfolio Managers and the Investment Committee implement investment strategy, and assists in guiding portfolio implementation within Kingsview’s systems. He is a Chartered Financial Analyst (CFA) and holds the Certificate in Investment Performance Measurement (CIPM) Designation, both designations issued by the CFA Institute.

Mitch also spearheads the GIPS efforts of Kingsview Investment Management and oversees its claim of compliance with the GIPS standards in investment performance reporting.

On a personal note, Mitch is a Florida Institute of Technology graduate and holds a B.S. in Aviation Management. He is a licensed pilot and flight instructor, and worked as an instructor at Sawyer Aviation in Scottsdale, Arizona before his deep interest in the financial markets led him to pursue work in financial services. Mitch began his finance career in Fort Lauderdale as a Commodity Broker before joining Kingsview’s Chicago team in 2010.

Growing up in Plano, Texas, Mitch’s interests in aviation and finance were apparent from a young age when he joined a local flying club and enjoyed tracking investments. Today, he lives in the west suburbs of Chicago with his wife, Samantha. He enjoys traveling, playing golf, and flying around the Midwest when he isn’t monitoring the markets.

See Mitch’s full biography here.

Program: Fox Now
Date: 6/3/2022
Station: Online
Time: 10:37AM

REPORTER: Unemployment is down a little and the price of gas is up a lot. So what’s that mean for the economy? It’s complicated.

There’s already early signs that inflation is peaking. But if you if you look at numbers such as the number of quits or outstanding jobs, jobs available, they are actually starting to peak and roll over.

REPORTER: Economists are worried because since the fifties, inflation over 4%, combined with unemployment under 5%, has meant the US economy was headed for a recession within two years. Inflation now stands at 8.3% and the May jobs report out Friday is expected to show the unemployment rate dipped to three and a half percent.

SCOTT MARTIN: The data in the economy is not awesome. It’s not really horrible. So I think we’ve got kind of a soft landing slowdown definitely upon us.

STEVE FORBES: When the Federal Reserve talks about a soft landing, you better put your seat along.

REPORTER: Drivers are looking for relief. The national average for a gallon of regular hit 4.72 on Thursday.

CONSUMER: Everything is sky high where I used to fill my tank for $50. Now it’s $80.

****

3:00

SVP Paul Nolte Interviewed on WGN Radio 7.01.22

Paul Nolte, Senior VP at Kingsview Wealth Management, joined Bob Sirott to discuss how inflation and the economy still have a long way to go before it starts to stabilize.

Click here to listen to the interview.

11:27

Portfolio Manager Insights | Weekly Investor Commentary – 6.29.22

Download the PDF here for the full commentary.

PORTFOLIO MANAGER INSIGHTS
WEEKLY INVESTOR COMMENTARY | 6.29.22
Investment Committee

Energy prices have been a major factor driving inflation higher this year. The strong economic recovery and the war in Ukraine have boosted the demand for energy while supplies of oil and natural gas have fallen. Gasoline prices have become a symbol of the burden that inflation places on consumers, and where they go from here will affect consumer spending, Fed policy and stock market returns. What should investors know about energy prices as they position for the next phase of the market cycle?

The challenges in the energy market of the past six months only add to the storylines of the past few years. During the pandemic lockdown, the front-month oil contract fell into negative territory. This had never occurred in history and was due to a collapse in demand made worse by a lack of oil storage capacity. A negative price meant that contract holders were so desperate to not take delivery of oil that they were willing to pay others to take their contracts.

Since then, the oil market has turned around completely as prices first recovered alongside the economy, then spiked this year following geopolitical events, with a few bumps along the way due to growth concerns. Brent crude jumped to nearly $130 a barrel immediately after Russia’s invasion of Ukraine. It has since settled in around $110 a barrel, the same level as in March, but these are still the highest oil prices since 2014.

In this environment, there are at least three major developments for investors to follow. First, energy prices have been a major contributor to rising inflation. Last month’s Consumer Price Index report, for instance, showed that energy prices rose 35% over the previous year and gasoline prices skyrocketed 49% and are now above $5 per gallon on average, a new record.

For this reason, gasoline and oil are perhaps the most important indicators for the path of the economy and markets. To combat higher energy prices, especially at the pump, the U.S. administration has released oil from the Strategic Petroleum Reserve, is negotiating with Saudi Arabia to increase their output, and has floated the idea of a gas tax holiday (although neither party supports this and only amounts to 18.4 cents per gallon).

This situation may seem odd given that the U.S. is now the top oil producer in the world due to the U.S. Energy Renaissance of the past decade. However, not only has U.S. oil production not fully recovered, but most U.S. refiners require imported oil to make products like gasoline.

Second, this has unsurprisingly become a contentious political and policy issue since higher gas prices hurt consumer pocketbooks and reduce discretionary income, effectively functioning as a tax. For businesses, higher energy prices boost manufacturing and transportation costs, affecting all products and services.

The Fed has become especially sensitive to the impact of gas prices on headline inflation, even though their policy tools can’t directly fix the disruptions to supply. This has spurred the Fed to raise rates at the fastest pace since the early 1990s. Whether the Fed maintains this pace will be determined by consumer expectations on inflation which are largely driven by energy costs. Steadier oil prices over the past three months are a positive but uncertain sign of where inflation may go from here.

Third, the energy sector of the stock market has benefited from higher prices and is the only sector in the black this year, although its year-to-date gain has been cut to 29% from a peak of 65%. However, for those who are properly diversified, the energy sector accounts for less than 5% of the S&P 500’s market capitalization, even after all other sectors have fallen. The fact that the sector has made these gains emphasizes the importance of investing within and across markets.

The next several months will be challenging for investors as markets continue to adjust to high inflation. However, investors are always faced with potential problems whether it’s financial crises, trade wars, the pandemic, lofty valuations, rising interest rates, geopolitical conflicts, or other challenges. Clearly understanding the key issues while resisting the urge to overreact is still the best approach to achieving long-term financial success.


Gasoline Price Components

KEY TAKEAWAYS:

1. The largest contributor to the record-setting gas prices is simply the jump in crude oil prices.
2. Costs associated with refining, distribution and marketing, and taxes have contributed also but to a much smaller degree.



U.S. Oil Production

KEY TAKEAWAYS:

1. With recent geopolitical events, U.S. oil production has bounced from its Covid lows and is spiking near all-time highs from 2019.
2. A strong contributor to the production increase within the U.S. has been the administration releasing barrels from the Strategic Petroleum Reserve.


Sector Returns

KEY TAKEAWAY:

1. Although the energy sector’s year to date gains have been cut in half since its peak, its gains this year demonstrates the importance of why investors should diversify assets throughout sectors and asset classes.



Historical references do not assume that any prior market behavior will be duplicated. Past performance does not indicate future results. This material has been prepared by Kingsview Wealth Management, LLC. It is not, and should not, be regarded as investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions as of the date appearing in this material only. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate their ability to invest for the long term. Investment advisory services offered through Kingsview Wealth Management, LLC (“KWM”), an SEC Registered Investment Adviser. (2022)

3:00

SVP Paul Nolte Interviewed on WGN Radio 6.28.22

Paul Nolte, Senior VP at Kingsview Wealth Management, joined Bob Sirott to discuss why investors are selling their bonds, what the market looks like this week, and what the Fed might do to interest rates.

Click here to listen to the interview.

7:33

CIO Scott Martin Interviewed on Fox News 6.27.22 Pt.2

Program: Cavuto Coast to Coast
Date: 6/27/2022
Station: Fox Business News
Time: 12:00PM

DAVID ASMAN: Kingsview Asset Management CIO Scott Martin is here with me now. Scott, you lived there 25 years. Have you ever seen it this bad?

SCOTT MARTIN: No, it’s getting bad, David. And after the facts that Grady laid out about the taxes alone, I’m moving. You know, I’m calling the moving company right now. David, we’ve actually been talking about it for a while and still have some things here we got to take care of. But I do look at relocation a lot. Just like was pointed out about Citadel and Ken Griffin. The funny part about what I think the experience that Ken Griffin had was, as Grady said, he tried to put money in to the races, $50 Million or so if you count it. Right. With respect to getting as they as they said here, David, they tried to vilify the guy for basically trying to dominate the election and take over and things like that. He’s trying to improve the business climate and the social climate of the city and he gets wrecked for it. And that’s the problem with the politics too many times.

ASMAN: That’s a problem with politicians everywhere, starting at the top, starting with President Biden. I mean, he he says we need oil and then he vilifies the people who produce it. I mean, it’s it’s so common where you want everything, but you’re not willing to incentivize anybody to get it.

MARTIN: Right or make consequences. I mean, Lori Lightfoot, state’s attorney, Kim Fox, come out and say, we don’t want gun violence. We want everybody to enjoy the beautiful city, which it is. I mean, look at this behind me, gorgeous. But guess what? Like it was pointed out in one of the comments there, people are scared to walk around. Yeah, people are nervous. And the consequences, David, don’t exist. The reform of cash bail, the fact that people get out when they commit an aggressive crime, they go back on the street, recommit the crime, get out again. How does that deter people from going out and hurting innocent people?

ASMAN: Yeah, well, 34% increase in violent crime. I don’t think there’s ever been a case where year over year there’s been a 34% increase in violent crime. Where do Pritzker and and Lightfoot live, by the way? How can they how can they remain in a bubble so, so totally ignorant of what’s happening to the people around them.

MARTIN: In the city. And the great question about that is they get security just beefed up around their home,

ASMAN: of course. I mean, that’s. The whole thing. Like we should mention, by the way, for those we should mention for those who don’t know that Pritzker is a billionaire. So he even if he didn’t get public for protection, he could he could afford it himself. But, you know, it hit very close to home, as I’m sure you know, Gianno Caldwell, who’s a wonderful, wonderful person who works here at Fox. There he is with his younger brother, much younger brother who was killed on Friday as a result of gun violence. We don’t know all the details, but he was murdered. It was it was the worst day in Gianno’s existence, as he put it, when it when it hits people. Do you know anybody personally who has been affected by that uptick in crime?

MARTIN: A lot of them, David. I mean, folks who have been either robbed or carjacked or in the case of Janos Young, dear brother, folks that know, people that have who’ve been killed on the South Side or anywhere, frankly. And this stuff just keeps repeating. David. And the sad part about it is what’s what’s what’s great about what G.A. said is hopefully this brings to light some some focus that we need on this stuff because unfortunately, as you mentioned, how bad the stats are, David, when the stats get so terrible, a couple killings here, a few more carjacking, their robberies, their attacks, those kind of go under the radar because it’s like, oh, well, the the data is already bad. You know, the data has already been shocking. So more it just doesn’t seem to pile on as much as it used to because like you asked me in the first question, it’s gotten so much worse that it’s kind of like it’s kind of standard. And that’s the attitude a lot of the folks have here, and that’s got to change. And that changes. Your thinking. Of movie presentation.

ASMAN: By the way, a lot of I don’t know what Pritzker’s talking about when talking about people moving back because the stats are clear that people are voting with their feet, they’re leaving Illinois. I think it’s the leader. That’s the only

thing that leads in is the number of people leaving the state. So it’s a horrible state and they.

MARTIN: Or they move here, David. They move here for a couple of years and then they leave. They try it and then they’re say, We’re out of here. We’re sorry we came back. Buh bye.

ASMAN: By the way, any chance of that Republican Richard Ervin winning?

MARTIN: I doubt it, because you know what? Pritzker’s got a stranglehold on the on the on the state because of a lot of the history here. And the problem is, to a lot of the voters in Chicago, very, very liberal and very focused towards the Democratic side.

ASMAN: They’re going to go bankrupt then because you lose the people and you lose the tax revenues and you go back. Unlike the federal government, you can’t print your own money.

MARTIN: Could be the. First state to file bankruptcy. The city might. Hello, Detroit. Yeah.

ASMAN: All right. Thank you so much. Good to see you, Scott. Good luck in Chicago. We appreciate you being here.

4:40

CIO Scott Martin Interviewed on Fox News 6.27.22 Pt.1

Program: Cavuto Coast to Coast
Date: 6/27/2022
Station: Fox Business News
Time: 12:00PM

DAVID ASMAN: Now to our top market story, though. Stocks today wavering between positive and negative territory. Despite some good news on housing and durable goods orders, it seems that worries over inflation outweigh just about anything these days. Joining me now is Kingsview Asset Management, CIO and Fox News contributor Scott Martin and capitalist pig hedge fund manager and Fox News contributor Jonathan Hoenig. Gentlemen, great to see you both. Thanks for being here. Scott, are investors positive about anything these days?

SCOT MARTIN: No. And that’s a good thing, David, because the data and the attitude, like you said, the consumer confidence numbers alone, business confidence numbers so bad that they’re good, it’s so dark that dawn is coming now. How long does that take? That’s anybody’s guess. But it’s soon, because even though the Biden administration and a lot of his economic council members say, no, no, no, no recession now, maybe not ever, at least not during our time in office or other experts, David, that you have on the shows that say it’s 2023 problem or 2024 problem? No, the recession is here right now. We had negative GDP, GDP growth. Easy for me to say in Q1, we’re going to have flat or say negative growth in Q2. The sooner the recession comes, the softer, the more shallow it is, the easier we’re going to come out of it and then we grow again. Because this recession, unlike a lot of previous ones that you and I have gone through, David, not in our relationship, but on the economic side of things. They have been demand driven. The past recessions are this is more of a supply driven issue, which is a good thing because demand is there. We’ve got to get supply and kinked, then the economy will grow again and I think it’ll actually boom once we get that figured out.

ASMAN: Well, Jonathan, the good news is that for 13 years, a lot of investors were under the misapprehension that you could keep printing money to your heart’s content, you would never have inflation. Finally, they realized that there

is a limit to that, and I think their willingness to admit to that is a good thing. What do you think?

JONATHAN HOENIG: Yeah, exactly. That’s it, David. And it’s great to be with you as well. I mean, look, whatever whatever Biden would be saying in terms of future of of money printing, right now, the market looks very weak in terms of what the dollar at least looks like. I mean, you’re looking at the dollar at two week lows. You’re looking at stocks at 52 week highs. That’s just at least for now. A lot of the stocks that the market’s playing on a week can quite waking quite weak in terms of the future of stocks. Well, Scott, have stocks found a little bit of a bottom here or is this just, you know, a pause on the way down further?

MARTIN: Probably both, I think. David, you know, look, window dressing, end of the quarter type of phenomenon, it happens a lot. I think we’re seeing that at the end of Q2 here. I think there’s some things to be constructive about as well, as I mentioned in my previous comments. But David bear markets do this. They take the elevator down and the stairs up or they take the stairs up and then jump out the window. So the frustrating thing right now, if you’re an individual investor, is you’re going to have these movements for a couple of weeks a week where you think things are all clear and then they possibly are not. But as our investors mostly are, I mean, there’s certainly some that are closer to retirement than others. A lot of folks that we’re working with, David, have one, two, three, four or five year time horizons. And there is all kinds of stuff in the cybersecurity space, cloud, space, tech, space, retail space, consumer discretionary space, hospitality space. I could go on and on. Even in the close markets that Jonathan shops at, there’s great areas of value there that folks need to jump on to here because this, like many other downturns in the market, is a tremendous buying opportunity, if you can look beyond the short term.

ASMAN: : Well, Jonathan Scott, as you just heard, thinks that we are in a recession right now. Not only is it unavoidable, but we may be in one. Do you agree?

HOENIG: Well, you have to look at the markets right here, right now. And at least looking at stocks right now, 52 week lows are higher when it comes to stocks. In terms of bonds, I mean, you look at 52 week lows of 50 stocks. If we close 40 stocks at 50, we close. So at least for now, it looks like more stocks

are weak than they are then strong, but looking forward to anything could happen.

ASMAN: Scott, the Nasdaq, of course, is really taking it on the chin. And we had David Sacks on Fox Business about a week ago talking about he’s he’s one of the original investors in Facebook, Google, PayPal, you name it. He’s been there. He says that it is all dry, all that capital is drying up, all of the investment capital, all of the venture capitalists all drying up. And it’s going to be a long time before it recovers. What do you think?

MARTIN: Don’t buy it. As far as I don’t buy that explanation, I think he’s right. I mean, it is drying up. But David, we’ve seen this man. I mean, we’ve been like let’s say it was oh eight, let’s say was even 2020, capital dried up. It was the desert. But as soon as the market or the economy got some footing, as soon as it stabilized, maybe that comes after November, after the midterm elections. Maybe Biden and crew, maybe Jennifer Granholm, maybe they figure out energy policy. I know that’s a that’s a farce or that’s that’s a that’s a long winded or long hoped thing that’s going to fade. The point is, things are going to change and capital does dry up, but it comes back super fast. Once the market does and once folks get comfortable, then this is no different this time until it does.

ASMAN: On the other hand, though, Scott, staying with you for a second, NASDAQ doesn’t look like it’s going to come back any time soon. I mean, I don’t see a real a real power. We do remember after the dot com bust and it was a long time before before Tech came back, aren’t we in a kind of similar period right now?

MARTIN: Oh, possibly. And you write About.com. It took some time back. Now, some companies did recover faster than others. So I think you may have to individually select some positions there. I mean, the Googles are way oversold. Microsoft, of course, and some other ones, as I mentioned, in cybersecurity and cloud. But similar to David financials after 2008, 2009 never supposed to come back. They did were supposed to have double dip recession, etc.. I love it when stuff looks like it’s not going to come back because it usually does.

ASMAN: Scott and Jonathan, good to see you both. Thank you very much for being here.

5:58

SVP Paul Nolte Quoted On Yahoo Finance 6.22.22

Kingsview SVP Paul Nolte discusses inflation and how the fed is strongly committed to bring inflation down.

Read the full article here: Yahoo Finance

3:00

Nolte Notes 6.22.22

June 13, 2022

Download the PDF here.

It has been said for millennia, sometimes for little comfort. “It is the darkest before the dawn”. Yet another huge drop in the equity market, now down in ten of eleven weeks and well into bear market territory. The Fed meeting did little to assuage inflationary fears as investors believe the Fed has little in their arsenal to fight rising food and energy prices. Powell’s comment at the press conference that another 0.50 or 0.75% rate hike is on the table for July and likely another 0.50 in September. It was only nine months ago that inflation was seen as transitory. What a difference a few months can make! To be sure, the rate increases are impacting parts of the economy, like housing, where mortgage rates are getting over 6%, when they were merely 3% at the start of the year. Housing activity has waned, lumber prices have cratered. One other part of the economy could see some bargains in the months ahead: retail stores. Comments from the biggest retailers about excess inventory could lead to sales during the summer to cut the inventory back to more normal levels. It is not the price cutting that many consumers need to see, but it is a start.

How bad has this year been for stocks? There have been only a handful of times that the markets have dropped by 15% in one quarter (assuming the market finishes close to current prices in two weeks) AND have dropped by 20% over two quarters since WWII. The good news is that, except for 2008, the next quarter was positive. In all cases the markets were higher a year later. When looking at the post-war bear markets, of the 14 prior bear markets, only three saw the markets lower a year later: 1974, 2001 and 2008. Based upon the historical trading record, the markets are likely to bottom within the next six months or so. This lines up well with the pattern of mid-term elections. The markets generally trade poorly into mid/late summer and then rallies strongly to the Presidential election. If there was a fly in the ointment, it is that the markets are still historically priced richly, especially if inflation and interest rates remain high. Fed Chair Powell will get another shot at explaining the Fed’s decision and outlook this week when he visits Congress. Keep your seatbelts fastened.

Interest rates were all over the map last week. The yield on 10-year treasury notes started out at 3.15%, rose as high as 3.50% and ended the week at 3.22%. Commodity prices fell 5% on the week, with oil prices (not at the pump!) dropping 7% just on Friday. Worries early in the week of an impending recession seemed to give way to the belief we are currently IN a recession. This would explain the funk that the stock market is in as well. For now, rates seem destined to rise, especially if the Fed is good on their word that they will be hiking rates through Labor Day.

One other part of the market that is “signaling” that better days are indeed ahead is the various asset classes and sectors within the SP500 are all at or near momentum lows. This has occurred close to market bottoms in 2020, 2018, 2015, 2009 and 2002. It doesn’t mean the markets will go straight up from here, but a bit of nibbling on a broad basket of stocks may be rewarding over the coming 12 months. Given the fall from grace over the past six months, growth stocks could bounce back the strongest in the months ahead. That said, the case can be made for international stocks that could benefit if the dollar weakens. Very broadly, the incredible rise in bond yields have made bonds an interesting sector as well. Everything is cheap, but for a very good reason, higher interest rates and inflation. If either of those can subside or at least stop their meteoric rise, investors may once again return to the stock market. It may be hard to see from here when smoke gets in your eyes.

The daily large swings in the markets are not likely to calm down anytime soon. Fed Chair Powell will be in front of Congress this week and many other Fed officials will be explaining their economic views. The hard economic data will be thin until after July 4th, but that does not mean stocks will be enjoying the summer wind.

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The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable but are opinions and do not constitute a guarantee of present or future financial market conditions.

Program: Fox Now
Date: 6/3/2022
Station: Online
Time: 10:37AM

REPORTER: Unemployment is down a little and the price of gas is up a lot. So what’s that mean for the economy? It’s complicated.

There’s already early signs that inflation is peaking. But if you if you look at numbers such as the number of quits or outstanding jobs, jobs available, they are actually starting to peak and roll over.

REPORTER: Economists are worried because since the fifties, inflation over 4%, combined with unemployment under 5%, has meant the US economy was headed for a recession within two years. Inflation now stands at 8.3% and the May jobs report out Friday is expected to show the unemployment rate dipped to three and a half percent.

SCOTT MARTIN: The data in the economy is not awesome. It’s not really horrible. So I think we’ve got kind of a soft landing slowdown definitely upon us.

STEVE FORBES: When the Federal Reserve talks about a soft landing, you better put your seat along.

REPORTER: Drivers are looking for relief. The national average for a gallon of regular hit 4.72 on Thursday.

CONSUMER: Everything is sky high where I used to fill my tank for $50. Now it’s $80.

****

3:00

Portfolio Manager Insights | Weekly Investor Commentary – 6.22.22

Download the PDF here for the full commentary.

PORTFOLIO MANAGER INSIGHTS
WEEKLY INVESTOR COMMENTARY | 6.22.22
Investment Committee

In response to worsening inflation, the Fed raised policy rates by 75 basis points last week, the largest individual hike since 1994. The Fed also sharply lowered their growth projections, increased their inflation forecasts, and boosted their year-end rate target to 3.25%, while emphasizing that they are “strongly committed to returning inflation to its 2 percent objective.” At his press conference, Chair Jerome Powell acknowledged that accelerating inflation is difficult for households and everyday individuals.

As prices have increased for food, gas, and other necessities, investors have grown increasingly concerned about the impact on the economy and markets. How can long-term investors view this difficult investing environment with the proper perspective?

This has been a challenging market because there have been very few places to hide, and there is no doubt that many investors are tempted to sell and simply hold cash. Markets have yet to stabilize this year and the S&P 500 and Nasdaq are both in bear market territory, having declined 23% and 31% year-to-date, respectively. What has made it especially difficult is that bonds have had one of their worst years in history due to the sudden jump in rates. The U.S. Aggregate Index of bonds has fallen 11.5% year-to-date while the corporate index has pulled back 15%.


ALL INFLATION MEASURES ARE NEAR THEIR PEAKS

KEY TAKEAWAYS:

1. All inflation measures are at or near their recent peaks. This is especially true for measures based on consumer prices, such as the Consumer Price Index and Personal Consumption Expenditures.


In many ways, investors are stuck between a rock and a hard place. On the one hand, many are applauding the Fed’s latest effort to combat the highest inflation rates in forty years. On the other hand, doing so by tightening interest rates will likely soften demand for goods and services across the economy. In the best case, spending will slow and inflation will moderate but remain above historical averages. In the worst case, tightening financial conditions will lead to a recession, albeit possibly a mild one.

Mortgage rates of 5.8% and gas prices around $5 are already creating economic weakness in areas such as the housing market and retail spending. Last week’s retail sales report was a negative surprise with consumers spending -0.3% less in May than April. On a year-over-year basis, retail spending still grew 8.1%. However, these figures aren’t adjusted for inflation. So, with the consumer price index rising 8.6% over the same period, consumers most likely received less for their money over the past year, even if they felt as if they were spending more. Thus, it’s no surprise that there are now signs of belt-tightening.

In this environment, there are two facts that long-term investors should remember. First, the temptation to sell investments and hide in cash is even more counterproductive today because high inflation erodes the value of that cash. Additionally, it’s difficult even in more normal times to try to time the market since rebounds can occur when investors least expect them.For both of these reasons, overreacting and shifting from an appropriately constructed portfolio is likely to be counterproductive. It is better to hold onto a diversified portfolio that can help offset these inflationary pressures going forward, even if it has struggled so far this year alongside almost all asset classes. As the old saying goes, it’s best to be fearful when others are greedy and greedy when others are fearful. While there are many reasons to be negative, this is also the best opportunity to take advantage of the most attractive valuations in years.


CONSUMER SPENDING UNEXPECTEDLY
DECLINED LAST MONTH

KEY TAKEAWAYS:

1. Retails sales unexpectedly declined in May compared to the prior month. In all likelihood, the actual numbers are worse than they appear because they don’t account for inflation.
2. These early signs suggest that consumers are responding to high inflation rates for necessities such as food and gas.


THE FED IS STEPPING UP THE FIGHT AGAINST
INFLATION

KEY TAKEAWAY:

1. The Fed raised its main policy rate by 75 basis points in June, the largest individual rate hike in 28 years. However, the Fed can’t control many of the underlying drivers of inflation such as supply chain problems, high energy prices, etc.


Second, markets tend to focus too much on the Fed, even in good times. The truth is that the core drivers of inflation are either out of their control or the result of stimulus decisions made two years ago by the Fed and Congress. Specifically, the Fed acknowledges that it cannot directly address higher food and energy prices which indirectly affect all prices. On a technical basis, these prices, which hurt consumers the most, are important components of “headline” inflation. Traditionally, economists and the Fed closely follow “core” inflation, which excludes the prices that matter the most today, since policy tools can only affect longer-term trends. Perhaps the best the Fed can do is to prevent inflation expectations from worsening and leading to an inflationary spiral. This would be a situation reminiscent of the 1970s in which persistently higher prices lead workers to demand higher wages which further causes businesses to raise prices. It goes without saying that whether this happens will depend on the direction of energy and food prices, which in turn depends on global conflicts and supply challenges.

The timing of the global economic recovery and the war in Ukraine created the perfect storm for the prices that impact consumers the most. Still, oil prices have fluctuated and are now back to the same levels they reached in March. There are also signs that some supply chain and manufacturing problems are easing, including for semiconductors and building materials. So, while these pricing pressures have remained high, they could naturally fall in the coming months. Ultimately, investors ought to focus on what they can control. In this challenging market, sticking with a well-considered financial plan is still the best way to achieve long-term financial goals. Below are three charts that highlight the importance of the Fed’s historic rate hike on consumers and inflation.

The bottom line? Investors ought to stay diversified and avoid the temptation to shift to cash in this inflationary environment. Where the market goes from here will depend heavily on the direction of consumer prices.


Historical references do not assume that any prior market behavior will be duplicated. Past performance does not indicate future results. This material has been prepared by Kingsview Wealth Management, LLC. It is not, and should not, be regarded as investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions as of the date appearing in this material only. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate their ability to invest for the long term. Investment advisory services offered through Kingsview Wealth Management, LLC (“KWM”), an SEC Registered Investment Adviser.(2022)

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CIO Scott Martin Interviewed on Fox News 6.15.22

Program: Cavuto Coast to Coast
Date: 6/15/2022
Station: Fox Business News
Time: 12:00PM

NEIL CAVUTO: The administration is great, he said, is seriously considering the possibility of temporarily junking the federal tax on gasoline. It’s 18.3 cents a gallon diesel. It’s even more at 24.3 cents a gallon for diesel taxes here. What we don’t know is exactly how far such a tax holiday would go. We do know that in just the last three weeks, we’ve risen about $0.18 on the average price of a gallon of gas. So whatever tax you take off the market all of a sudden shows up in the underlying price. So damned if you do, damned if you don’t. So where is all of this going? And this day, the Federal Reserve is meeting to see what it can do to sort of curb this appetite for not only gasoline and oil, but pretty much everything that’s now taking grip in our economy. Scott Martin joins us. Ray Wong joins us. Gentlemen. I want to begin with you, Scott, because the administration’s approach to this is anything but for the time being, more domestic production. It’s going to try to urge the oil companies to do just that. But the oil companies come back and say, well, you’ve made it very, very difficult, because whatever reprieves you give us are very short lived and very limited. But the message seems to come from the White House. You guys are gouging Americans and it’s got to stop. What do you think.

SCOTT MARTIN: It does, Neil? And you know, you’re making the oil companies the enemy when in fact, there’s a solution. And oil companies and consumers are not stupid. They know this is government policy tried and true. This was the war that President Biden declared on the energy markets when he took office. And so this is just a follow through from that sentiment. And so instead of being, say, friendly to the oil companies and saying, how can I help? Biden comes out and says, you’re doing this wrong. Change your business or else. And that’s just not going to work. And the great point you made about the federal tax holiday, I mean, in Chicago alone, we’ve got state and local taxes, Neil, that are close to a dollar of gas prices that we see today. There’s all kinds of help that if the government wanted to come out with and give the American consumer just immediate relief, they could do this. But instead they kick this political football down the field and say, well, it’s the oil companies, it’s this, it’s that, it’s Putin, for crying out loud. And so they don’t want to address the real problem here. And until they get to the real solution, which is exactly government policy, we’re going to see prices go up even more.

CAVUTO: In the meantime. Ray Wang It’s really the Federal Reserve and only the Federal Reserve, whether you like the Fed, whether you hate the Fed. The fact of the matter is they’re the only ones right now with the ability to sort of directly deal with this head on. We don’t know exactly how they’re going to deal with it today, but it’s looking like at least a three quarters of a percent hike in the overnight bank lending rate called federal funds, which would bring us up to the round, the one and three quarter percent level with likely a lot more to go from there. What do you think?

RAY WANG: Yeah. I mean, part of it was really to get the demand destruction and we’re starting to see implications. Right. Auto sales are down 3.5%. The National Association of Homebuilders have pretty much said their indexes are continuing to go down in terms of confidence, in terms of production of homes. We’re seeing in retail sales that were up 0.1%. But when inflation is 8.6, you’re really behind eight and a half. So I think the market’s taking care of some of this. The question really is, where is the ceiling? And so if they hit 75 basis points today and then say we’re going to do another 50 in July, I think the market will breathe a sigh of relief and say, okay, good, we think that’s the top. But if they keep moving and move too far, I think there’s going to be pushing us into the edge of a recession. And the economy is in a frail point at this moment.

CAVUTO: You know, Scott, I was sort of factoring things out, you know, pen on a napkin here. If they got aggressive and stayed aggressive right through the end of the year. I know the consensus seems to be and I don’t know where you gentlemen are, Scott, talking to you now that we end the year with the Fed funds, probably around three and one half percent. But there’s another argument to be made. If the Fed really gets aggressive and hikes three quarters of a point at every remaining meeting, which would take you through today, the July meeting, the September meeting, the November meeting, and finally the December 13 and 14 meeting. I added all of those up and if it got 75 basis points with each meeting, I would assume unlikely we’d be up close to 5%. Are we going to go there?

MARTIN: We could. And I think, Neil, the key point, good math, by the way, there, I don’t think I even would have gotten that right and I don’t think the Fed would have either. And that’s a scary thing. I think the sooner they get hawkish and the sooner they get, let’s say, tight, Neal, the better off we’re going to be. I know that sounds crazy, but the market has been crying crazy for the last two weeks now in the ten year benchmark for the ten year rate. I mean, look at the rate. You’re right on the ten.

CAVUTO: You’re absolutely.

MARTIN: Right. Yeah. It’s telling the market. It’s telling the Fed, rather. Neal, I think you’ve got to go 100 basis points today. 75 is just the baseline. If they do 100, I got a prediction. The market rallies, the equities rally because they’re like, okay, the Fed is now taking a line in the sand. They’re putting the stake in the ground and saying, no more of this screwing around. We’re not going to do 50 basis points anymore. We’re going to get serious. And the sooner they do that, Neil, the sooner the recession comes and or is over and the sooner to my friend that they can actually start cutting if they need to, to get the market or get the economy back on its footing.

CAVUTO: That’s interesting. You know, Ray, it’s sort of like the rip the damn Band-Aid off approach. It’s going to hurt like heck, but better that than just to sort of slowly do it, which would still be painful. Just painful a little longer. If the Fed were to do something like that, forget about a full percentage point cut today. That could happen. I’ve heard that. But to to raise rates to the point that by the end of the year, we’re close to 5%. If you think about it, we have an inflation rate that’s well north of eight and a half percent. So they’d still be under that. And normally that’s what history says is you’re sort of guideline. Your benchmark, whatever the inflation rate is, is where your Fed funds rate should be. I just wonder, like if you get up to those kind of levels, aren’t all bets off.

WANG: All bets would be off. But most definitely this is just one side of the problem. I think your earlier point really around energy prices, which is driving the inflation piece that’s got to be addressed. This war on American energy is ridiculous. I mean, we need a transition to ESG, but it’s got to be a pragmatic transition that doesn’t bankrupt everyone in the process. If you want to drive down inflation right now, pump oil, drive down energy, open sources. It’s not just the leases. It’s about also making sure the regulations are available, the permitting is available, and the fact that the pipelines, the transit and all those other regulations are removed. But that just means people aren’t serious about driving down inflation if they’re not addressing the energy issue.

CAVUTO: I’m just wondering and very, very quickly, my produce is going to kill me. But you guys are so good. I did want to pick your brains on this. I know you’ll be back a little bit later in the show. Scott, if the Federal Reserve were to signal that an aggressive rate hike, a series of them, a minimum of 75 basis points were in the cards. You argue the administration, the markets would respond favorably and maybe start turning things around. There are many who said even at these levels, the markets are still rich, though. Do you think the markets remain toppy? Even with the 20% plus decline we’ve seen in the major averages?

MARTIN: Short term, they may be a little toppy just because of the valuations that you’re referring to, Neil, and the fact that earnings are going to come down in the next couple of quarters, because we do have that slowdown in consumer spending. But for even the shorter term, which is like two or three days, I think the market loves it. I think anything short of something hawkish or something serious from the Fed today, which is basically 50 basis points or less, to jump back to Edward Lawrence’s amazing reference point to Nancy Kerrigan earlier, that’s your Tonya Harding today, 50 basis points or less. It’s going to whack the market in the knees because the Fed is not serious about getting their handle around things if they go higher. I think that’s where the market actually bounces here because yes, valuations are high, but they’re short term, not to high enough to where the market can rally.

CAVUTO: Now, I left out just looking at the Nasdaq and technology stocks. All right. They’re off, many of them 50%. The average itself. Well well, north of 28%. So you could say that’s overkill. But others are saying it is still rich. Do you?

WANG: You know, I don’t as well. I think the floor and the Nasdaq’s going to hit around ten. I mean, if you’re looking at 15 X on P as kind of like the low point, that’s probably where we’re going to sit somewhere between 14 and 15. I think what we’re going to realize in the Nasdaq is the tech companies are still doing good. The earnings are amazing. You saw what happened with Oracle a few days back. The the real question is really where is the dollar going to be? And, of course, what’s going to happen in the B to C market in terms of consumer sentiment and if that’s going to slow folks down. But tech companies are still growing 20 to 30%, especially the big cap ones.

CAVUTO: Gentlemen, don’t wander too far. I want to pick those fine brains and take your quotes to be my quote. So they were my ideas. But thank you very much, guys.

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