Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: All right, folks, I want to bring in our friend Scott Martin. Scott, let me just pick up on that. How much do you consider intrinsic value when you’re buying or selling stocks?
SCOTT MARTIN: I consider it, I guess against the backdrop and I love the comments you shared there with David, because intrinsic value is great and it’s great for the long term, but it’s sometimes tough in the short term because as we’ve seen, Charles would say, today’s market, I’m sure Facebook is he noted Amazon, Google, you know, stocks we hold as well. Those looked like they had intrinsic value three months ago or even maybe six months ago to some degree. And some of them. Yeah, and they’ve fallen further since. So the reality is I think you have to check the market kind of emotions as well, Charles, and the backdrop, but just know what you’re kind of getting into with respect to that, because sometimes stocks can fall further, they can get more into value, and then they eventually rise again. When the market say emotions dissipate and get more towards, say, a normal trading upward sloping market environment.
PAYNE: You know, Scott, that reminds me when I was a broker and we, you know, someone we get someone in a stock at 30 and calling back up, Hey, Mrs. Jones, you like the stock at 30? You’re going to love it at ten. You want to buy some more. So that’s what.
MARTIN: It sounds like a can’t miss. And Charles, a couple of names that are out there that we’ve kind of looked at the same intrinsic value play. And remember, we have the fastest growing economy in the world, the world. The world, as somebody once said, and you might hear that quote last night from somebody very important. The point is, though, we do have a good economy, I think, coming out of this current recession that we’re in. So companies like Southern Company Charles we found in a recent recent purchase that have some nice intrinsic value Netflix. Yes boys and girls there’s intrinsic value there as well as possibly Zoom Communications and some other names that are along those lines, Snowflake, that are seriously beat up, seriously in the trash. But ones that, as David just said previously, based on some future cash flow analysis and future assumptions that I think are likely to come true, these are stocks that are going to go up over the next 12 to 18 months.
PAYNE: I’m not sure what you’re talking about. Last night I was watching reruns of Banner Check. You need to check that show. Fantastic.
MARTIN: I was watching Lifetime, man, just to go to sleep.
PAYNE: Sorry. Let’s talk about the CPI number tomorrow. I mean, everyone is worried about it. Concerned. You’ve been playing it pretty cool. You’ve been positioning yourself because you’re a longer term investor. But let’s just play around with this. If it comes in below consensus, then we get a pop. And does it have any staying power?
MARTIN: I think markets have to be happy with that because finally, I think we’re starting to see that slowing of the inflation rate of growth. Here’s the question, though. What is the bond market do next next door to say that inflationary number, Charles? Because the bond market does not react. Meaning if bonds don’t get bid and rates don’t come down, I think the market blows that thing off is maybe a temporary thing to get excited about, meaning that if Bonds can respond and you can start seeing that bid and bonds in correlation to say maybe a lower than expected CPI number, then you’ve got the setup for a market rally into month end.
PAYNE: Scott I’ve got less than a little less than a minute. What is the market worried about, though? That’s that’s an unknown. In other words, we know about inflation. We know the threat of recession. We even know the threat of stagflation. We know the Fed’s going to hike at least three times 50 basis points and they’re going to start to let the balance sheet run off. We know all of the dangerous things out there. What part of that are we so concerned about?
MARTIN: Yeah. You know, I think it’s a labor issue now, Charles, you know, I was just at a conference a couple of days ago talking about how in virtual one, but talking about with a lot of folks about how tough the labor market is right now. I mean, how many jobs are out there, how much labor there supposedly is out there? But they’re not willing to work or they’re not fitting up with, say, the jobs that are out there. So I think the market is concerned, Charles, that we don’t unlinked these supply chain issues as much as we can. We don’t get people back to work and being where they should be when they do need to go to work, do need to go to the offices, do need to go to the restaurants, the service industries and so forth. So that’s the kind of thing that the market, I think, worries about because there’s still demand out there, folks. So you have to match that up with the areas where you need the supply of the workers to deliver those goods and services.
PAYNE: Yeah, that’s why I’m investing in automation stuff, man. I think businesses are going to have to invest big time. Yeah, you get a chance. Check out that banner. Check that first season of banner. Check, Scott. I’ll let you go, my man. All right.
CIO Scott Martin discusses the recession, energy re-emergence, earnings and consumer staples.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: Now, without a doubt, these are tough investing times, but the market is always about the future. So we’re going to try and see if we can go to some sort of a time machine taking a may 20 of 2023. What are we going to be looking back at bringing in right now to to help figure it all out? We’ve got Luke Lloyd, Scott Martin and Rob Luna. Thanks a lot, guys. First, let’s get your read on recession and how your current portfolio is mixed. You know, stocks, cash, bonds, whatever it is. Let me start with you, Scott. Recession, yes or no?
SCOTT MARTIN: Recession now? That’s right. That’s that’s that’s a factor. I mean, that’s really what people are missing. I don’t care if it’s Scott Ryan or all these other goofballs talking about recession in a year, two years, which is ridiculous recessions. Now. Now, the cool part about that is we’ll get through it faster. It’s going to be shallow, but it’s going to hurt and it’s starting to show up in the market. I mean, that’s why the market is going nuts. That’s right. Rates are going down, boys and girls, right now with all these Fed hikes supposedly coming. And yeah, I’m a little fired up today because I saw this great interview with Edward Lawrence and Jim Bullard. I mean, the guy’s foolish, not Edward. Jim Bullard is. I mean, he’s talking about above trend GDP growth. No worries about stagflation. He’s talking about all these great Fed mandates that are ahead, like they’ve blown it between the Fed screwing this up and the administration. And I’m not talking about Whoopi Goldberg supporting Joe Biden. All these people out there, the actual administration has no clue about helping the economy and helping oil prices, helping the consumer. So we have really bad policy out there on all fronts. And that’s where the market is going down. That’s why we’re being driven in recession. The recession is here.
LUKE LLOYD: Yeah, I think Scotty hit the nail on the head there. You know, we’ll find out in a couple of months. We’re actually already in recession right now. But here’s the thing that everybody needs to know. By the time we feel the
most amount of pain economically, the stock market will already be on its way back up. You know, we’ve been pretty cautious for a while, but we’re finally nibbling at some stocks again. Finally, the scariest part to me is that two thirds of Americans are living paycheck to paycheck right now. And what happens when the job market starts to take a turn, which.
PAYNE: It will, which, by the way, we have to point out that’s the goal of the Federal Reserve to make it take a negative turn. The Fed is trying to crack the economy without destroying it. No one has confidence, Rob, that they can pull that off our, you know, recession camp already.
ROBERT LUNA: Yeah, absolutely. I think Elon Musk and if Scott Martin says that we’ve got to be in a recession, Charles, I mean, I think, look, we had a negative print the first quarter of this year. More than likely, we’re going to have a negative print the second quarter. So that would mean we are technically in a recession. We won’t be calling that for a little bit of time. But look, the playbook that you use when you’re preparing for a recession, consumer staples, some of those types of stocks, they’re trading more expensive than the growth stocks now. So don’t think that’s going to be a safe haven, guys.
PAYNE: All right. I want to stay with that, because the action in the market itself has been pretty intriguing. I mean, I don’t think a lot of folks would understand that coming into this session. If you go back to May 11th, the Ark Innovation Fund up 17% and that safe haven staples down 7%, including 10% this week. So, Rob, 20, the top 25 positions in ARK now have a price to sales ratio of six. That’s down from 36. I mean, how do we define value in these moments when you have these big value names they told you to sell at a big loss. You went to the safe havens and now they’re getting clobbered.
LUNA: Yeah, look, I mean, like I said, the safe havens, they’re trading more expensive. Look at Kellogg. It’s trading at 22 times earnings versus 17 times earnings on on metaverse right now. So that’s not where you want to be going. And as you mentioned, Charles, and we’ve really seen this as the market is trying to put a bottom ark yesterday was up four, four and one half percent when the market’s down. That’s exactly the type of rotation we need to see. And guys, look, if you’re looking at 2000 is the playbook, the S&P on the S&P right where it was now, the the PE on the Nasdaq back then was 28. Right now it’s 20. So if you’re looking to look at valuation metrics, we’re not that far off here either.
PAYNE: Luke, you mentioned you started nibbling. What are you looking at?
LLOYD: Yeah. So one of the stocks we started nibbling at is Axon Enterprises. So you got to look at current strong cash flow companies and not look for growth in earnings 5 to 10 years down the road. And the fact of the matter is, we do think that we’re entering a recession and a stock like Axon. They supply tasers and body cams to police officers and military. Right. So crime actually goes up in a recessionary environment. So that’s in an area where we’re looking at. And then also in the energy sector right now, you know, oil is not is had a big run up, but nuclear energy is actually where we’re taking a look right now. CCJ is a stock we just picked up as well because nuclear energy is one of the cleanest energies out there and nobody talks about that. And I actually was just talking with an advisor over the past couple of months that specializes in nuclear energy. It’s getting a lot more political drive. And again, it’s going to adopt a lot quicker than people realize.
PAYNE: Yeah, let me stick with the energy theme. Crude oil now up for the fourth week in a row. We know energy has been like the only shining light with respect to equities. Yet if you look at it long term, over the past 30, 40 years, it’s only a spec of what it used to be. In the seventies it was like 25% in the market. Scott, with that. Is it too late to chase these names?
MARTIN: Yeah. Don’t call it a comeback, because it’ll be here for years. Because I’ll tell you what. Energy is starting to re-emerge. Like you said, Charles, we’ve been adding pipelines. I think we have XL already, but we’ve been adding pipelines like MLP because that’s just going to be the toll booth for the flow of the crew that goes through. But I love Luke’s call. To me, we’re talking about more crime in a recession if we can actually handle it, and nuclear stuff. So that’s interesting plays as well because you’ve got to get creative here. Rob talked about it. I mean, Staples, the one issue, guys, that I have a problem with, I mean, Staples absolutely destroyed this week, absolutely hammered one of the worst week Staples have had in years. Here’s the thing, though. The numbers are so goofy on earnings going forward. If you look at Yardeni, Bloomberg, S&P, J.P. Morgan, everybody’s like 250, $250 on the S&P for 2023. You put a 20 X estimate on that. That’s 5000 on the S&P. Okay, fine. But guess what? If that number is wrong, let’s see. It’s 200. Let’s say it’s even less and you put a less estimate or less multiple on that estimate. You’re looking at S&P 3500 or less, maybe 3000 at fair value. They’ve got to get those earnings
estimate numbers right because PE means nothing if those estimates are wrong and.
PAYNE: They’re supposed to be used for P, which is one of my favorite metrics. Let’s talk about the biggest loser today. Ross stores another major blow to retailers. Obviously, they’re dealing with inflation and these massive inventories just as people are spending less money. On the flip side, though, restaurant sales are going up. We could also see air travel above 2019 levels. Rob, you’ve talked about that sort of reopening of FOMO, a yellow kind of thing. I’m getting my acronyms all confused here. Is that a place we want to be right now?
LUNA: Yeah, I mean, I think so. Look, this millennial generation values activities, they value experiences. They’ll actually sit asleep on their mother’s couch to be able to do that and spend the money. I’ve seen that in my own practice, so I think that’s an area you’re going to want to stay with. And so traditionally those have pulled back during recession, I think, because we’ve already had some weakness in those. That is probably a theme that you could stick with, Charles.
PAYNE: All right, guys, we’ve covered a lot. I really appreciate it. Really good stuff. Luke, Scott, Rob, thank you all very much.
Kingsview Partners CIO Scott Martin discusses the level of bearishness in the market, technical indicators like stochastics, MACD or relative strength, and the optimism in earnings estimates.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: You know, they say the bell doesn’t ring at the top or bottom in markets and individual stocks, though we do know this, individual stocks and markets can become overbought and oversold. I mean, look at this yesterday. That’s the fear and greed index. It got a lot closer to the worst possible degree of fear. We also learned individual investor bullishness declined again, and yet it remains substantially below historic levels. But I got to be honest, I kind of like what I’m seeing with the the bearishness. It’s receding, you know? Yeah. The survey is obviously considered a contrarian indicator. The lower the bull rates, typically the better. But I like that that bearishness is also beginning to ease a little bit because it means to me that investors are becoming neutral and that they may be more open minded to sort of sifting through the ashes. But it’s not just about surveys. I mean, in real life, folks, take a look at that active managed equity exposure. It’s declined below 30%. These are money managers, folks. That’s always a good sign. Meanwhile, consumer sentiment remains in a freefall. Today’s report plunging to a rate of 59.1 from 65.2. Here’s what you need to know. The Street was looking for 64. In fact, all aspects of this report are problematic, but none more so than buying conditions for durable goods. What you’re looking at is an all time low. Yeah, it’s flashing a red flag. Through it all, the market has held tough. We’re trying to finish the week on a positive note. Joining me now to discuss, David Dietze and Scott Martin. You know, earlier this week, our friend Ed Yardeni wrote a pretty good piece about people being too bearish, investors being too bearish on the market if your time horizon is a year or longer. Scott, is he right?
SCOTT MARTIN: He’s right 100%. And we’ve seen this movie before, Charles And it happens every time now. It happens to different degrees every time. It’s not always the same level of bearishness to what you pointed out in your intro there, which was awesome because that stuff that I look at to my man, but there’s overabundance of bear bearishness every time there’s too many sellers, every time there’s forecasts and telegraphing of recessions, bear markets, pullbacks, negative GDP, stock crashes that everybody seems to know about and they never happen. And so when I look at things in the marketplace, Charles, specifically even technicals like things like stochastic or things like relative strength, and those things are down in single digits or in the case of relative strength or MACD. I know these are crazy things to throw out. Technical indicators is what they are. Kids effectively when they get really negative. Guess what? And when you feel sick putting the trade in, that’s when it’s a good trade. And that’s what we’ve been doing this week.
PAYNE: David, what do you think? I mean, again, you know, this whole game of picking a bottom we know is folly. But every time you look back and you say, that was the zone, that was the area, we should have at least have begun to nibble. Is that right, that maybe the market’s become investors have become too bearish?
DAVID DIETZE: Yeah, absolutely. You know, I love the slogan stocks don’t grow to the sky and they don’t keep falling forever. And certainly we saw a lot of indicators at the start of this week which are consistent with capitulation. There were several days there may have been up to three days when 95% of the volume was on the downside. Of course, we’re up to even after today’s strong results here, seven weeks in a row down for the Dow. We haven’t seen that for over a decade. And as you point out, it was started with the retail investor, with the eye surveys getting very bearish, but now it has spread into the professional investors. And when you see that you are primed for a bounce, often see 5 to 7% bounce from these conditions.
PAYNE: What about this report this morning? You know, this this sentiment read, of course, the PPI and CPI number. Both were also disappointing. We had negative reaction to that, that the Fed didn’t you know, we didn’t get a negative reaction to this, even though the consumers two thirds of the economy. Is this the kind of negativity the Fed is actually looking for?
DIETZE: Yeah, I think so. You know, when the stocks stop going down, even amidst bad news, you suggest that a lot of that’s already been priced in. Investors have already braced for the worst case scenario. And that’s why I think we’re getting a bounce here despite some, you know, disappointing news on the CPI.
PAYNE: Let’s talk about earnings season. I know we’re almost at the tail end of it. Over 450 companies have reported, you know, I give it a, B, B plus, maybe C plus. Here’s the thing, though. Many are saying that Wall Street many people on Wall Street are saying that Wall Street estimates are too high. Therefore, the market is a lot more expensive than metrics like, say, for P e ratios, which suggests. Let me get your thoughts on that, because at the end of the day, the market, you know, earnings are the mother’s milk of stock market rallies. Are we being too optimistic about earnings going forward, Scott?
MARTIN: Yes. In a way, I think we well, let’s put it this way. I like how you set that up, Charles. Earnings earnings estimates are pretty darn optimistic. I mean, if you look at any any estimates where you look at Jp morgan Bloomberg, pick your favorite one. Justin Bieber, I’m sure, has got some estimates. The point is, is that they’re all sanguine. I mean, they’re really up. I mean, you’re talking about ten, 20% growth over the next couple of years. That’s probably a touch high in the sense of where we know things are right now and that it doesn’t mean they’re going to grow negatively or be negative or stay flat. But your point is well taken. The market is going to pay for those future earnings. So let’s just pick a number. Let’s say the earnings, say, for the S&P five in 2023. Let’s pick a good number, a fair number, $250. Let’s put a 20 multiple on that. That’s five K. Boys and girls for the S&P at fair value. If you want to put a 20 on it. The question is, Charles, I would take it from saying maybe the earnings are a little bit sanguine, a little bit high, but what’s the multiple the market is willing to put on that? 20 is not a bad multiple if rates aren’t going to the sky if inflation’s under control, if midterm elections go the way of, say, the Republicans and maybe we get some people back to work finally and kink the supply and supply chain issues. So I’m willing to take that bet at five S&P. That’s what we’re going to be based on, 250.
PAYNE: And to that point, David, you know, we almost have this conversation at the end of every earnings report. Everyone’s too optimistic. Earnings come around and 78% of the earnings be 80% of revenues beat. So it feels like we’re always beating the street anyway. I mean, is it becoming almost it doesn’t matter. We know earnings matter, but it feels like the earning calls and the earnings, unless this season it was almost always knee jerk sell offs. I mean, when do we decide it is a good earnings season?
DIETZE: Well, I think there’s two things. It has been a good earnings season, but there is a game, of course, as you point out, where companies and analysts keep expectations down so that their companies can be. And of course, that’s
PAYNE: Everybody’s sandbagging.
PAYNE: The CEO thinks they’ll make a buck. He says $0.90. The analyst thinks they’ll make $0.90. He says $0.85. And if they make a buck ten, we’re all happy and everyone looks good.
DIETZE: So the problem has been going forward and quite frankly, with Russia, Ukraine, and you got China and you’ve got the inflation in the Fed, the the outlooks from the corporations are very, very modest and so forth. And so that’s not giving support to stocks. But again, we know it’s part of the game to sandbag it.
PAYNE: All right. So what happens now then? You just brought up the Fed. What happens between now and that next Fed meeting? Because almost all the important data is out, the jobs report, the CPI report, all the earnings are out. It’s a waiting game. What does this market do? Does it remain rangebound? Can the bias shift back to the upside?
DIETZE: Well, I think we’re going to be focused on the macro factors. I think the number one macro factor is really going to be signed for we’re past peak inflation. If we can do that, then I think a really hawkish Fed is going to be somewhat taken off the table and we’re not going to have these bond yields continuing to shoot up. So that’s the number one thing to look for. Obviously, the Fed speak highly interpreting that macro data also is going to weigh heavily.
PAYNE: So how are you looking at it, Scott? Again, you know, between now and that next Fed meeting, it’s going to seem like an eternity. I think we all know 50 basis points, even though there’s some folks out there still begging for 75. I wouldn’t mind 75. And if that’s the case, then what do you what would you be buying here under that notion?
MARTIN: So to sum it up in a word, nothing is going to happen. That’s a Seinfeld reference until that meeting, because of the fact that it’s like well, like David said, I mean, there’s not enough.
PAYNE: Scott the markets are going to open and they’ve been tremendously volatile. You mean we’re just going to kind of have these little pedestrian sessions where we’re not up or down that much?
MARTIN: Great point. Now, I should have said that. I should have clarified it basically, like we’ll be at the same levels probably, Charles, but it’s going to feel like an attorney, like you said, because we’ll have these crazy moves, five, 10% and some of these individual names like AMD, for example, when the stock may be at the same level. The key point, though, is yours. What is the Fed do in June? Because if they get closer to maybe saying they’re going to do 75 or stay at that 50 level, I still think the market can handle that. And that’s something that the market can look at constructively where get these bots, get these AI stuff out of the way, get real investors back in there, get some of those institutions back in there to pick off some value here and you’ll start to see the market levitate upward.
PAYNE: Real quick, David, are you buying anything right here?
DIETZE: Yeah, absolutely. So I’m going to highlight Applied Materials Tech, of course. As we know, Nasdaq down close to 30% coming into today. So I’m looking for those quintessential blue chips. We know we’ve had a chip shortage forever. And of course, Applied Materials makes the equipment that allows chip manufacturers to to make the chips. And so it seems to me, no matter what type of chip you’re talking about, Applied Materials.
PAYNE: And of course, earlier in the week, Taiwan Semiconductor said they’re raising their prices at least 6%. So I like that idea. David Scott, thank you both very much. Have a great weekend, guys.
Kingsview CIO Scott Martin discusses the psychology of the market. He talks about taking advantage of buybacks and future market rallies, as well as names in the discretionary space.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: So once again, this market reeling into a weekend and that’s ahead of that big Fed rate hike we expect next week. Remember last Friday’s close? I keep bringing this up because it was so awful. I actually last weekend was thinking about a Black Monday situation. It was not an easy weekend. This may not be much better, even though I know it’s a good thing, folks, right, to wring out the excess and to shake out the weekends. Obviously, I’ve been around for a while. I know that’s a good thing. But, you know, what’s the message to this market right now? Like what exactly is it trying to tell us and what should we be hearing? I want to bring in KingSview wealth management CIO Scott Martin. And Scott, you know, before we even talk about next week, let me just talk a little bit about this week. I think you were long Netflix. I think you had sold Amazon. Just your thoughts on those and some of these other big tech names that reported this week.
SCOTT MARTIN: Oh, man, how much time do we have? You know, I think I need a therapist after all of this. And it’s just, you know, then of the days. I mean, come back to your point, Charles. We did try to bottom fish on Netflix. I’m still going to keep bottom fishing because I just think it’s overdone. We sold Amazon way higher for some of our portfolios and we’re talking like 3300, which is awesome, you know, I mean, Facebook was a surprise, which was great. So we have some of that and not as much as we used to. So here’s the takeaway. And you’ve been talking about this all show, and I like how a lot of your guests put it. I think Bob Dahl put it this way. His way is like it depends on your risk horizon or your risk tolerance and horizon. I mean, there’s a lot of reasons, Charles, to be scared if you’re in tech right now, if you’ve got a short horizon, meaning like something under a year, that’s frightening. Now, that could still work out. But if you’re like a lot of our investors and even like myself, I’ve got some spare cash. Our investors have spare cash. Our clients, and we’re using these pullbacks even today feels scary to pick up things like Tesla, maybe some pipelines, maybe some Chevron. I’ll even probably fish towards the end of the day here at 3:00 Central and just find some more stuff that’s getting just really pounded for no reason other than the fact that it’s just amidst the sell off.
PAYNE: I like that part though. The no reason part, right? I mean, you look at these companies that beat on the top line, beat on the bottom line, they’re expanding margins, they’re taking market share and they give strong guidance when they’re down in the market like this. I think those most times eight out of ten, they’re a gift.
MARTN: I agree. And I’ll tell you what’s funny about saying for no reason. It’s like the reason is that everything else is down, you know, like, you’re right. There’s no reason. And here’s the other thing I’ll say about where the market is just in general. There’s no reason, like, are you kidding me? There’s no reason. We know every reason the market’s going down and the market should have to. That’s what’s kind of the weirdest thing. I talked to you about this last Friday, man. Like, what’s weird about the trade, though, is we’re bellyaching about interest rates. We’re all scared about this. I almost said something else about inflation, and we’re worried about a slowdown. What? Like we’ve been talking about this for six months. The Fed is engineering all this stuff and the market’s deciding to sell off by, what, 15%, you know, over the last few months? That’s a little scary to me because it might mean something else is coming, right? But if it isn’t, this is a great opportunity. An opportunity over the last few years, frankly, similar to 2020 March.
PAYNE: Yeah, you always worry about what you don’t know because there is a point when the market can react to what the knowns are, even if the unknowns are harsh. To your point, one thing I think that could help is right now, because of earnings season, companies are what they call a blackout period, but the buybacks are going to come back. I mean, just this month alone, we heard 200 billion buybacks announce, Apple 90 billion, Amazon, $52 Billion. ExxonMobil tripled theirs to $30 Billion. Does that help you? I mean, do you want to own these kind of stocks or, you know, you’ve got that kind of firepower behind them?
MARTIN: Yeah. I mean, it’s nice to see them convicted in their own name. I think that’s good when executives are buying stock and not selling it to. The weird thing is, though, Charles, in this market and this and this psychology that gets announced in earnings and the market doesn’t even care, like you’ll even
see, like you’ll talk about it because you’re just so kind of devout into stocks. But you look at the other networks because I watch our enemies sometimes and it’s like they don’t even talk about it because the stock is not even even taking into consideration they don’t talk about it. And so even in articles, I’ll mention it one line, you know, and then that’ll be it. So my point is on that is it’s the psychology of the market that to your point, you should take advantage of those buybacks because then when the market starts rallying and those names start performing, somebody’s going to come out in like three months of, oh, wait, on their last earnings report, they’re buying back 200 billion of stock. That must be it. And it’s like, no, you knew that three months ago. You ignored it because you got lost in the psychology and you missed out. So a good point. And I think that’s something to keep in mind when you’re looking at names here.
PAYNE: So next week, let’s let’s handicap the Fed here right now. And it’s no, I haven’t crunched numbers. I haven’t done much other than just Wall Street experience. I feel like we could be in one of those situations where we know what’s going to happen. And to your point, we know it, but we’re still getting hammered because of it. But when it does happen, the the the counterintuitive move happens. In other words, the Fed hikes by 50 basis points. And I see a big rally on the same day. What do you see?
MARTIN: I say, I say the same thing, except I think there’s 250 basis point hikes in May and June. I think June is the one because I think to your point that you made with one of the other guests today, June becomes the next meeting. I think it’s May, but the next meeting becomes when they turn tail and they’re like, all right, inflation is starting to slow down. Demand is starting to fall back. We’re starting to get into an economic slowdown, etc., etc. Consumers being affected, rates are going up, housing, blah, blah, blah. They’re going to be like, we’re going to take a maybe a pause and we’re going to start being very careful about how we proceed from here. The ten year is pulling back, so like and, you know, just in the open market. So they already see that this is starting to work. So that I would just I agree with you on a percent. I just say the move is June, not May, because it feels like it’s too quick for that.
PAYNE: Yeah, right, right. Right. And so you mentioned earlier you were you’re buying a you probably buy something at the close. What are you going to buy? What are you looking to buy here at the close?
MARTIN: Well, I. Man, I wish I could tell you. You can’t keep secrets very close.
PAYNE: Can you? What? What sector are you looking at?
MARTIN: Well, I’ll tell you, man, I mean, I’m probably going to pick up something in the probably something more in the discretionary space. I mean, Booking.com looks pretty good. We own that already, but we got to probably pick up some more of that for our investors. TMS is one we own. Charles has been great the last few days. Costco, you know, there’s just stuff, man. If you look at the charts, you know, there’s kind of a a company handle type thing and it’s doing this sort of round out and it breaks a low and then closes above the open and then it starts to turn. Then you turn the stochastic up and you’re kind of off to the races, of course, until it turns down again, which could be Monday. The point is there is stuff that’s churning in. Those three names are ones I’m looking at.
PAYNE: Yeah, no, I love all three of those names as well. Thank you so much, my friend.
MARTIN: See ya.
Kingsview CIO Scott Martin discusses the interest rate curve, tech earnings, the airlines, Telsa and restaurants.
Program: Making Money with Charles Payne
Station: Fox Business News
CHERYL CASONE: I want to bring in now advisor groups Phil Blancato and Kingsview Wealth and Fox business contributor Scott Martin. It’s great to see both of you as always. And Phil, I’m going to start with you. I just mentioned this with Bob picking up on earnings. Earnings are coming in hot next week. Do you think we’re going to see anything to get the market out of this Fed rut, especially the banks who normally benefit from higher rates?
PHIL BLANCATO I do. You’re looking at more than half of the S&P 500 has a buy rating right now, 57%. That’s the highest number in ten years. Add to that, I don’t disagree with Bob. We’re just getting back to normal. A normal means normal earnings growth. The normal earnings growth means a positive. S&P 500 is not negative. So we’re going to get through some of this volatility in the next few weeks. Here, we hope to see a resolution, Ukraine and Russia. But more importantly, I think the markets prepare for a Fed hike and the earnings season could give us that little boost we need when things are going to be more positive than negative.
CASONE: Now, Scott, what are you looking at?
SCOTT MARTIN: I agree with Phil. I mean, I think financials are a really interesting aspect of the market right here, Cheryl, because to your point, I mean, the interest rate curve, depending on whether you look at threes versus sixes as far as six months or you look at the three versus the tens, I mean, it’s it’s kind of crazy how you can kind of parse that out and find your own reason to predict the next recession. But the reality is the banks are in good shape. So we’re actually looking at financials here, Cheryl, kind of looking at what I would also say is maybe the tail end of this great reopening trade. I mean, the great reopening trade in our opinion, was March. I mean, that was like the second half of March. So now it’s this April angst, if you will, Cheryl, as we come in to tech earnings, what their outlook and guidance is going to look like going in here to say Q3 and Q4, because those are the areas of the market where we’re likely to see the biggest bounce back once they finally hit some firm lows.
CASONE: Oh, gosh. Okay. Phil, I thought that the great reopening trade was last year story. Maybe not. What do you say?
BLANCATO: I completely agree. I actually think there’s more room to run. I when a consumer got over $2 trillion of spend, look at the regional banks and how they’re set up. Well, they’ll make money and cash balances and be able to loan some money to consumer. Actually, they were in the middle stage of this reopening trade. I think there’s still plenty more to come. I think you can still make money in the hotels and the airlines and the restaurants, and you do better than the growth sector, which gets hurt by rising rates. What’s pivot to a cyclical recovery based on consumer spending and you’ll do just fine in your portfolios. Case in point, value stocks this year are mostly up, not down. Growth stocks are down. So let’s parcel it out for what it is. If you were a tactical mover in your portfolio and you favored the consumer here, you’re doing just fine. I think we’ve forgotten that.
CASONE: Yeah. Now, I’m glad you brought up the airlines. Scott, I want to take this to you. You’ve got Spirit Airlines saying that talks are underway for a $3.6 billion takeover by JetBlue. Do you play either of these stocks or spy another buyout in the works? And we got to bring in the whole frontier side of this drama, which is turning into kind of a movie, to be honest with you.
MARTIN: Yeah, it’s going to be a total catfight. Don’t play those airlines because I don’t fly them. I got to tell you, though, guys, I disagree. I mean, if you look at the airlines and look at some of the restaurants, I mean, the reopening trade looks like dog food, frankly, in the last couple of weeks with respect to those stocks. So it looks like they’re already turning over. So my point is the following. I think the reopening will continue to happen. But you guys know this as well as I do. The market has front run just about every moment of, say, this COVID effect in the last two years. So with respect to how the market does bounce back, I think finding reasonable, appropriate valuation, which is not in the airlines right now, frankly, Cheryl, is how you’re going to make money in this market if you do get back into growth. Phil’s right. Value has been, in a word, valuable this year. But I do think that growth, trade does reignite, especially if we get further and further away from this COVID veil that we’re trying to lift.
CASONE: All right. Let’s pick up on that growth story, Phil, with you and this issue with Elon Musk. I mean, again, another piece of drama playing out. This makes businesses fun, right? You’ve got Elon Musk. He’s going to be meeting with Twitter employees after being appointed to the board. They’re now saying that he’s going to meet with them. We don’t know when, but are you going to buy Twitter or Tesla or anything that comes of this? And what do you think that this really means for Twitter? And also, I got to mention, Phil, those social media stocks were all getting a bounce when all of this news broke earlier in the week.
BLANCATO: So I’m not a fan. For example, a little comparison, Delta Airlines trading down 8% of the year below its historical average. To me, at the cheap stock, that’s got a chance to grow much higher. So I’ll take the other side of that versus the Twitter that’s trading above its P average. Does it have the kind of revenue we’re looking for? Valuations that don’t make sense to me. A classic growth story, looking for a recovery trade when interest rates are going higher. Just because Elon’s in it doesn’t mean it makes it a great stock with great earnings growth, especially as interest rates are higher. So I say, no, it’s not a buy. I’m not there yet. Maybe in the fall. Look back the growth. I just think they’re still too expensive.
CASONE: Well, maybe it’s too soon to see what he’s going to do. Scott But there is a lot of conversation around the fact that he might make it more, more free on Twitter, that they will kind of back off of their woke agenda of silencing let’s be honest here, conservative voices.
MARTIN: Yeah. Because Elon Musk says they should. I mean, look, I love Elon Musk. We own Tesla. It’s been great. And other than sharing a birthday with him, which is June 28th, thank you very much. I don’t think there’s much he can do with Twitter, honest to God. I mean, Phil’s right. Like that’s a tough mountain to climb. We actually sold our Twitter that we had for a lot of our clients this week. Just because we got that final bounce, because the stock has been a disaster.
CASONE: Yeah, we’ll have to see. I mean, I went on the air in the early days, you know, questioning Elon Musk’s outfits and words and, you know, sometimes his relationship choices. And I’ve been wrong on all of that. So, you know, who knows? Phil Scott, guys, thank you very much. Appreciate it. It’s good to.
Kingsview CIO Scott Martin discusses reallocating to more growth and aggressiveness when the economic climate is murky. He also talks about oil, energy stocks, and the Russia/Ukraine dynamic.
Program: Cavuto Coast to Coast
Station: Fox Business News
CHARLES PAYNE: So this has been a crazy, crazy week. Here to help us hash it all out. We’ve got Kingsview Wealth Management CIO Scott Martin Scott. You know, first I got to just ask you, the last two weeks in general, this market. You know, everyone that came on was cautious. They were out in the market. They were in defensive plays. I mean, have you been caught somewhat by surprise at the resolve of this market the last couple of weeks?
SCOTT MARTIN: Yes, I have. Charles, it’s one of those things, though, where you get surprised, you get caught off guard. But you also have to think back in recent history as to this is what happens when data gets really bad, when the economic climate gets a little bit murky, and when there’s geopolitical issues all around and everything looks really terrible and everybody’s telling you to get out of the market, the market’s going down, rebalance, reallocate. That’s actually the time you should be reallocating. But to more growth, more aggressiveness. And so while I am a little surprised at the resolve, I’m not surprised in the sense that we’ve seen this movie before it and we’re seeing it play out right now.
PAYNE: Let’s talk about some of the niches that have come on chips. Yesterday, NVIDIA was up 10%. You know, are you are you buying chip stocks at this point?
MARTIN: Well, I wouldn’t chase them on a week like this week. Now we own Nvidia and a lot of our ETFs that we run through Monarch funds as well as through a lot of the accounts that we run for our clients. We already have Nivida, which has been good. I would look at some other chips though. Charles maybe is seeing it spread over to maybe the Andes of the world or the Texas Instruments. But I wouldn’t chase someone on a week like this week because there’s a lot of froth in those names now, at least in the reaction to in video so far. So watch them come in a little bit, maybe 5% down from these levels and I’d be a buyer.
PAYNE: What about oil stocks, fossil fertilizer stocks? A lot of these names getting an extra bump from what’s happening over with the war on Ukraine.
MARTIN: Yeah. They’ve been good and they’ve been good. Diversifier. I think that’s the biggest news about oil this year is that it’s been great. Even though it’s equity, you know, if you look at Chevron, Exxon and some of the others, it’s like that’s been a good diversifier away from traditional equity because those have been up. Well, a lot of stuff’s been down. So we have some energy stocks in our portfolios here at Kingsview would tell you this, Charles, right now, I like the pipelines. So if you look at stuff like MLP, higher dividend, close to 78% and that’s the mover and shaker of the oil in the crude that we need to start going in this country as we try to develop, I think, some sort of energy policy maybe.
PAYNE: What about cannabis names? You know, we all know cannabis was hot then they fell off. They’re on fire this week, no pun intended. A lot of rumble rumbling about legalization or not decriminalization, if you will. You know, they’ve come down a lot. Would you be a buyer here?
MARTIN: They’ve been crushed and it’s tough with cannabis because they kind of were that forgotten asset class, like you mentioned, Charles, in the last six months. I mean, dare I say a lot of those stocks went up in smoke and that is a pun intended. So with respect to where cannabis valuations are, I think they’re attractive. But to your point, it’s largely politically driven right now. And if you get bad news in political land from the cannabis area, that’s not good. If you get good news, it’s obviously good. But no, no telling how that’s going to pan out short or long term, really.
PAYNE: You know, Scott, I was reading a headline today and Ukraine, you know, there’s a counteroffensive. They’re going on the offensive. They’ve held the ground. The war is a month old. Russia is not winning. In fact, many think they’re losing. And it feels like there could be a correlation to, you know, we’re rooting for Ukraine. And every time we see something positive there, maybe the market going up, I’m not sure. But if the tide turns and it looks like Russia is on the verge of some sort of decisive victory or their atrocities start to increase, would that start to hurt this market, in your opinion?
MARTIN: You might. Charles as you know, the market usually preempts that good news or bad news in some cases. So it may be too late when we finally get that news weather. Like you said, it’s good or bad. But look at any kind of resolution, any kind of positivity out of that area of the world is good. Longer term now, short term, there may be a little bit of gamesmanship here to play on that. But longer term, look out, six, 12 months, that’s going to be a largely positive development for the S&P 500 and frankly, probably for fixed income as well.
PAYNE: And, of course, for the world and humanity. Scott, thank you so much. We covered a lot. Folks, we’ll be right back.
Kingsview CIO Scott Martin discusses economic growth numbers, the Fed’s balance sheet and consumer confidence levels.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: You know, I want to just stay with Powell for a moment. Right. Because the markets when Powell initially started speaking, we were on a roller coaster ride. We started that session higher. We went all the way down and then we started to climb back up. And it was interesting, too, about this thing is that that Fed announcement, it wasn’t unanimous. We had James Bullard, who dissented. And then today he went even further, saying that the committee will have to move quickly to address the situation or risk losing credibility over this whole inflation thing. I want to bring in Scott Martin now because Scott James, Paul at one a 50 basis points, he wants to be ultra aggressive. He’s saying if they miss this opportunity, the Fed will lose credibility. And I’m not sure what that would mean for the market. But do you think he’s on the right path?
SCOTT MARTIN: I think he was on the right path at one point. Charles But lately, because of the Russian Ukraine conflict, as well as some latest economic growth numbers, I think 25 was the right move a couple of months ago. 50 looked good. But Bullard’s been interesting in his commentary of late because you’re right, he’s talking about the Fed reducing its balance sheet, another kind of very hawkish measures coming into a period. Charles, we’re getting into some economic uncertainty. We’re seeing consumer confidence pull back. We’ve got a disappointing retail sales number, I think, coming up for March. So I think the Fed made the right move and also left the door open for some more flexibility going forward just in case things do weaken.
PAYNE: And we should also point out, like the two year, it rose so much ahead of the meeting that the jawboning worked like there were certain things that Powell want it to happen that actually happened and he didn’t have to pull the levers saving his ammo. Inflation is with us, we know that. But the dynamics of it are changing. Service driven is going up, the man is going down. And that to me seems to impact your portfolio. Are you making changes based on the fact that services we’re going to be using them now?
MARTIN: Yeah. I mean, we’ve looked and looked at picking up some consumer discretionary names a lot here on the lows this week, Charles, just because I believe that’s that service area you talked about. And just as you’ve been talking about this whole show, I mean, my goodness, you know, as we talked about really all these last couple of months together, my man, I mean, it’s darkest before dawn in the markets and also outside your front door. So what that means is when things look really bad and everybody’s telling you to sell, it’s usually too late. And that’s actually the time you should be buying. So not only have we been picking up, say, names in the consumer discretionary sector, but also some of those tech growth names that have been thrown out with the baby and the bathwater.
PAYNE: Let me ask you about the housing market. We have some big news today. Existing home sales declined 7.2% in February. That was well below Wall Street’s consensus. Meanwhile, mortgage rates are soaring. In fact, this is the fastest pace on record. Is this housing boom still in place?
MARTIN: Sort of depending on the location. Real estate’s always location, location, location. It’s cooling off. The one problem, though, that housing has that we’ve seen in other areas of the economy, Charles, it’s supply. Housing supply out there is not exactly robust. So therefore, as rates have ticked up, as you mentioned, very, very steep pace that we’re seeing out there now that will soften demand. But we’ve got to get supply going as far as new homes and homes for sale. If you really want to see housing cool off or at least that price rise that we all have seen cool off.
PAYNE: All right, Scott, thank you so much. You know what? You’ve been guiding them, right, for a long time. Appreciate it. Have a great weekend.
Kingsview CIO Scott Martin discusses consumer sentiment, keeping the market calm, and remaining nimble in case the market drops further.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: I’ve got two of the best with me in studio, I in the studio. Scott Martin, Paul Shatz Let’s start with this Russian invasion, guys, because it’s really it seems to me it’s going to be tough for this market to get any traction until this. There’s some kind of closure there, Paul.
PAUL SCHATZ: I don’t think any and first of all, it’s great to be back in person.
PAYNE: Are you?
SCHATZ: We’ll wait. I’m real like
SCOTT MARTIN: This is actually happening. No pinch me.
SCHATZ: I’m not sure. I think you have to have resolution on Russian Ukraine. Look, in 1990, when Iraq invaded Kuwait, stocks bottomed in October of 1990. Both didn’t fly until January of ninety one in 03. Yet a similar thing. I think people are taking their eye off the real ball. That’s the Fed we have to get by March 15 16. And regardless, except obviously a tactical nuke, but regardless of what’s going on in Ukraine and with Russia, I think once you get by the Fed, I think markets will feel a little bit of one. Even though we don’t think there’s any uncertainty, I still think there is some in the markets. Ultimately, the resolution should be the upside and swift in Q2.
PAYNE: What do you think?
MARTIN: I think Paul’s right. I think you got it. Well, it’s been what kind of risk you want to take, right? Because Paul, as you mentioned, there are times in history when the markets have rallied ahead of the all clear. And that’s that’s the opportunity, right, Charles. But there’s also investors like we have that don’t want to take that kind of risk or shot. But I agree that it’s just like the consumer sentiment number you mentioned. The worst that gets, the more bullish I’m getting because that means folks are selling their getting out. That’s putting in a bottom, in my opinion, and that’s when you get a jump in if you’ve got a long term.
PAYNE: Let me ask you about a potential for a recession, because that number today, every time it’s hit that number, we have had a recession. Yesterday, Janet Yellen said she’s confident the Fed is going to engineer a soft landing. How are you? What are you doing right now, Scott, in your portfolio vis-a-vis that? First of all, do you believe there’ll be a soft landing?
MARTIN: I hope. I mean, of course it doesn’t make.
PAYNE: Does it make a big difference in what you own in this market? Or whether you think that we can skirt a recession or if we go into one? It doesn’t make sense.
MARTIN: Not so much, Charles, because we will come out of that recession eventually and to handicap it, white saying, Hey, the recession starts in June, it starts in September, it ends in December. Who really knows? I wish I had the crystal ball. I smashed it like five years ago and didn’t buy another one. But the point is well said on your behalf, which is Janet Yellen’s to going to feed this market, the philosophy that’s going to make the market the most calm. I don’t know if she’s entirely realistic, but it does not change what we do, Charles, because we’re managing around the edges. You know, I’m a gold lover. We’ve been adding more gold here. We’ve been adding some energy, been trying to hedge out some of that equity risk and growth.
PAYNE: Also, some of the tools for public consumption, right? The administration trying to put the ball the inflation anywhere it can go. Oil companies pluton. You know, now it’s now it’s a fall or the responsibility of the Fed,
SCHATZ: As Alan Greenspan, who was the worst Fed chair ever, would have said they’re obfuscating the truth. Here’s a bottom line first, regarding the recession. If you looked at that chart closely right now, consumer sentiment is worse than it was in March of twenty twenty. It’s worse right now, right? The difference now is if you look at that chart, you’ll see when consumer sentiment plunged that much, you were already halfway into the recession.
SCHATZ: And to Scotty’s point, I don’t know whether we’ll actually get two negative quarters of GDP growth, but I don’t think we’re going to look back and say wow. Plus five percent GDP evaporated in the span of months. It just doesn’t happen.
PAYNE: So I was reading something yesterday. I thought it was amazing because it said only twice in history has the S&P been down this much. And there is still this many names above the 50 day moving average, right? Twenty three percent of the names above the 50 day moving average. And I’m thinking about this because every show I’ve done for like six months has talked about how many names are below the 50 or 200 day moving average. They’re saying there’s not enough capitulation that we need to go ahead. We need even more suffering. That’s like one of those Marvel comics guys. You know, like, I want to destroy the Earth. I mean, do we need more destruction in this market, Scott? That’s how you
MARTIN: That’s how you rebuild man. You destroy everything and you get more building back. I mean, but you only you would find a stat like that.
PAYNE: It blew my mind, like there’s not enough destruction.
MARTIN: Here’s the deal, though that number is significant if and only if we actually do have a recession coming or we do have a fed mistake because that could be something that just shows that this is maybe more of a nut, I guess not false bottom, a higher bottom than we think there may be where that could actually be a constructive number to say, Hey, look, we didn’t have a crazy washout. Things maybe weren’t as bad as we thought earnings were going to be better going forward. Therefore, you can construct let me
PAYNE: let me switch gears. I you want to get on this, but I want to. I want to also ask you guys about some different ideas before I let you go. And and so…
SCHATZ: We have to go?
MARTIN: We’re staying the hour.
PAYNE: But there are there are parting, parting prices. We got napkins, we got makeup removal
PAYNE: No more pens. So Deutsche Bank initiated coverage on a whole lot of tech names today and what they all had in common. They’re all down big time, they’re all getting hammered. TrimTabs says that there’s significant significant buying in tech right now, and the ratio to buying, you know, to long versus short is that is at the highest one. It’s been at 75 weeks. Paul, do you start to nibble here sometimes? Some of these tech names
SCHATZ: Hand on table bashing your fist on the table. You absolutely do. Look, we know we love to make fun of Wall Street for downgrading all these stocks after they’ve been down 80 percent. Give Deutsche Bank some props because they’re issued by signals after stocks were finally down. Insider buying in tech only is screaming. It’s not one company or two companies. It’s across the industry. These guys, men and women, they may be early, but they’re rarely ever wrong over the intermediate long term. The short answer is yes. Investors who can be nimble of should absolutely look for some of these beaten down names.
PAYNE: I mean, it’s hard, Scott, to imagine that this world does amazing work that we’ve been talking about. You know, that’s going to that’s going to materialize in front of our very eyes. All of a sudden, the opportunities that have evaporated, these stocks have gotten cheaper and maybe rightfully so right.
MARTIN: And things like evaporated because Putin went crazy and rode in on the high horse and thought he could take over Ukraine. I think it’s still riding horses, or that oil got to one 30 overnight. One night like that suddenly evaporated. To your point, all this enthusiasm, I don’t agree with it. I think Paul’s right nimble is a key word there, because I think nimble also means keep some dry powder for when the market screws up again and overreact to something else that happens. And you’ve got money to drop in if the market drops further, but they’re good long term names. He’s right.
PAYNE: All right, Paul Scott. Great seeing you guys to make sure you make sure you grab your makeup removal and way out.
MARTIN: I’m getting a tie.
PAYNE: All right now for greater insight.
Kingsview CIO Scott Martin discusses how fear in the market can translate to the creation of the best opportunities for an investor. He also talks about the contagion effect, European lenders and the bond market.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: I like to bring in Mark Tepper and Scott Martin, the Scott, you know, let’s I am excited about the market the way it acts, particularly over the last week. I do agree. I think we bought them on January 24th. Your thoughts on that and also obviously the daily grind, though of of having to even try to come off the canvas it does wear on you.
SCOTT MARTIN: It does it’s hard some days to come into work, believe me. Charles, as you see, seen futures down and then down further on the open market at 8:30 central time. It’s like you and Jim talked about, though it’s OK to be fearful here as an investor, as a money manager like myself. But fear is a creation of the best opportunities for an investor going forward. It’s just you have to buy one a lot. A lot of others are selling. It’s always darkest before dawn. And when you get these flashes like you just talked about with Jim there, these are times you’ve got to come in and try to catch a falling knife for two. And yes, your hand will get cut a couple of times, but there’ll be other times you’re going to catch the knife right on the handle and you’re going to take it up in the air. And so those are things that are worth the risk, in my opinion here, especially as we approach very oversold levels.
CHARLES PAYNE: I don’t know if I wanted to play the market or join the Green Berets. Are you as you were talking, you know, of course, Marky Mark, you’ve been cautious in this market for a while now. So what in your mind it could still be the downside risk? And really, ultimately, what would you be looking forward to become more opportunistic?
MARK TEPPER: Charles, I think the biggest risk right now is that obviously the war drags on, drags everyone into a recession. You know, and I can’t predict that I can’t handicap that. But what I’m watching very, very closely to give me kind of an indicator as to when it’s time to start getting back in is growth versus value. We all know value clobbered growth over the last year, but just as this war started to really kick into higher gear last week, it looks like that trade might be on the cusp of turning. You know when growth is abundant like it was last year, fresh off all those skinny checks, value stocks work, but when growth is being revised downward because of this Russia Ukraine war, investors again are willing to pay a premium for growth. So at this point, it’s too late to be chasing value stocks. I’d rather pick off good growth stocks as they’re beginning to turn.
PAYNE: And to that point, Scott, one of the favorite areas you know, outside of energy, the energy trade right this year, the financial part of that now maybe some today has something to do with bond yields, but it also feels like there could be something looming out there. I don’t know, maybe something with Russia, maybe a long term capital management, but financials are taking it on the chin. And I agree with Mark that value in general is extremely expensive on a relative basis. So where does that leave you?
MARTIN: Probably a little a little worrisome when it comes to financials because of rates, in my opinion, I think that contagion effect is so overplayed. I like some of the early Paris Hilton songs that I used to listen to. I mean, it’s kind of like, you know, the rates are something that’s obviously going to affect the net interest margin. But if you look at this contagion effect, Charles, we heard this before with Evergrande in China. We heard it with the Greek debt crisis. We heard obviously in the financial crisis, which proved true. But there’s been so many other issues that have been this contagion effect on banks that really haven’t come through. And so I don’t believe this is another case of that. Maybe that’s more of a European lender issue, which definitely could bleed over the United States a little bit, but I don’t think that’s a big effect. So I actually don’t want to touch financials here, but they’re going to get to a point as rates continue to plummet because the bond market is, in a word, freaking out like Lindsay Lohan used to do. So therefore, you’ve got to look at finances here as a bargain at some point on that value of trade that Mark talked about. All right.
PAYNE: So let’s talk about either what you guys are buying or what’s really high on your potential buy list. Let me start with you, Mark. What are you looking at in this environment? I know we talked about the parameters. What’s looking enticing and intriguing are the specific names rising to the top.
TEPPER: Yes, so I’m buying travel stocks, so I think there’s just a ton of pent up demand for travel, and I’m really hoping President Biden may give everyone kind of that all clear signal tonight. So I bought some delta below 40 bucks. That’s my favorite airline, and I just bought some Airbnb. I mean, if you go back to early 12, 20, 20, pre-COVID, it was over two hundred bucks a share and now it’s like one hundred and fifty bucks. Last quarter was good. Forward guidance was pretty strong and I’ve been hearing more and more from people that hotel kind of people are now opting to stay at homes like Airbnb, so that’s good for them. So I would be buying travel stocks.
MARTIN: Yeah, I like pipelines here, Charles, trying to take advantage of energy, just not so much on the XL, but looking at the transport of the actual commodity and just a quick note about tap here, Mark Tepper if you’re playing at home. I mean, mark, the way you’re talking, you and I might take some trips together here going forward. So I do like travel as well. We own booking dot com, BC and G.
PAYNE: All right. Great conversation, guys. Thank you both very much, Mark and Scott.
Kingsview CIO Scott Martin discusses buying the dip and purchasing companies that are “down with the crowd”, plus thoughts on Amazon and Google.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: So, you know, on this show, I’ve been talking about this stealth market crash because it’s been going on for literally months and it’s been masked, however, by the major industries. I mean, just for example, just this year, the S&P is down nine percent. But forty nine percent of the names are down 20 percent or more from their 52 week high, and the carnage is even worse than that on the Nasdaq in the Russell 2000. This is why I think investor sentiment rates are so low because in real life, investors are still pumping in tons of money into this market. Sure, it’s obviously moving to different niches, but there’s still buyers, even as they feel the pain. The question is, does it actually make them the smart money? I want to bring in Michael Lee and Scott Martin. The number one axiom in investing is buy low, sell high. So that means buy the dip, Scott. I mean, the retail investors are doing they’re doing this during the middle of a meltdown. Does that make them the smart money?
SCOTT MARTIN: At times it does, Charles, and it’s easier said than done, certainly, I mean, psychologically, it always doesn’t feel the best. In fact, some of the best trades I’ve made are ones that I had to kind of close my eyes and hit the button on. So I agree, I think on some of these big down days, we’re getting a ton of volatility, both up and down these days. You got to pick up stocks that you like, maybe add the positions that are down because these are long term holds for most people that have good prospects going forward. Once we get through this malaise.
PAYNE: Mike, I know you have been bullish throughout this entire period, so I would assume that you like this approach.
MICHAEL LEE: Yes, Charles, yes, and I would have to say, though, this kind of depends on what your expectations are, that if we have a big sell off that you’re going to make your money back or get a quick trade, I’d say day trading now is kind of as hard as it’s ever been on the backs of one of the easiest periods to day trade ever. But, you know, keep in mind, this is not the first led the first Fed led sell off over the last decade. We had ones in two thousand eighteen 2016, 2015, 2014, 2013, 2011, 2010. Anybody who bought into those dips 12 to 18 months later was handsomely rewarded.
PAYNE: What I’m talking about, you know, some of these areas that that have really cause, I think, investor sentiment to get hammered. One is SPACs. And then, of course, they’ve underperformed the market by a mile. This month, 14 planned SPAC offerings worth $4 billion have been pulled. You know, Mike, I actually love it. Now I’m hoping that maybe with stuff like this that maybe somehow the FCC demands more transparency. I know the onus is always on buyer beware. But things like this, I think, have given the market a bad name.
LEE: Well, Charles, you know, I’ve said it before, I’ll say it again, I hate SPACs, and you can make these things so transparent, they’re translucent. The fact of the matter is the incentive for a SPAC is to do a deal. And, you know, the bulk of the time they overpay for those deals, which is not the shareholders interest. And SPACs that actually work out and people make money on those are the exception, not the rule. I would I would. You know, you want to steer clear landmines. I’d steer clear of SPACs in any market environment,
PAYNE: of course, have been a lot of land mine, Scott. Even without SPACs coming into the session, 44 percent of names on a Nasdaq Composite were down 50 percent or more. Now, surely they don’t all deserve that fate. So looking to these ashes sifting through the carnage? Where do you see some opportunity?
MARTIN: Yeah, there are a lot of dead bodies out there, Charles, and you can find some good ones, I think, to pick up here. I mean, two that we like right now are Workday and Zebra Technologies, two names we’ve talked about on the show before with you just again, stocks that I think are oversold, stocks that do make money, stocks that have nice prospects built into recent earnings reports. And I think their earnings are going to be very good this quarter and next. And therefore, these are companies that are just down with the crowd. So therefore you go into those ashes, as you mentioned, and pick up some stocks that have some real prospects here to grow going forward. And they’ll be handsome rewarded when the when the market bounce bounces back.
PAYNE: Mike, what are you looking at?
LEE: So, Charles, next week we’ve got earnings from Facebook and Google and while I would say from an ideological standpoint, these companies are pretty evil companies, but they’re printing money left and right. Saw, you know, you saw with Apple and you saw with Microsoft that these mega caps, the reason why they are mega caps is their earnings power and how successful they’ve been. I don’t think that changes. Facebook is down 22 23 percent from its September high. You could get it at well, I guess it’s Meta now. But but owning these names into earnings is probably not the worst idea. All right. And I’d say, you want to be adding in this sort of ugly environment of multiple contraction. So as these companies continue to grow at double digit growth rates in the top and bottom line, you know, two or three years from now when you have some multiple expansion, you know you’ve taken advantage of the earnings growth as well as a multiple expansion, a more favorable market conditions.
PAYNE: Scott, I’ve got just 20 seconds, but one or two names next week. Earnings Do you want to be in before the earnings report?
MARTIN: Yeah. Two big ones Charles, Google and Amazon. I mean, have you waited in the S&P and Nasdaq, of course, and they can save this market. So seeing how Amazon does reflective of the consumer, how Google does reflective of crowd cloud it, that is an internet. You’ve got these two names. You could actually come in here and really let this market back off the ground.
PAYNE: Michael Michael Lee and Scott Martin to the best. Thanks a lot. I really enjoyed that conversation. I hope people were taking notes.