SVP Paul Nolte Interviewed By Reuters 7.26.21

Reuters interviews Paul Nolte, SVP & Sr. Portfolio Manager

Kingsview SVP Paul Nolte discusses portfolio allocations in light of Beijing’s regulatory crackdowns.

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3:00

SVP Paul Nolte Interviewed By Reuters 7.20.21

Reuters interviews Paul Nolte, SVP & Sr. Portfolio Manager

Kingsview SVP Paul Nolte discusses the Delta variant’s potential effect on economic reopening.

Click here for the full article

3:00

Nolte Notes 7.12.21

July 12, 2021

“We’re all mad here, I’m mad. You’re mad.” And so down the rabbit hole we go! Just when you think you have it all figured out, the economy and/or the markets throw you a curveball. Maddening, sometimes. But we are in a deranged time where everyone is a bit crazy. We celebrate huge employment gains, yet at the recent pace, it will take another seven months to regain the old employment peak. Job openings continue to grow as companies of all stripes can not find willing workers. Many “consumer-facing” businesses have shortened hours due to a lack of employees. The Federal Reserve believes easy money can solve this problem, so they keep rates at historically low levels while pumping over $100B into the markets every month. “When you have a hammer…”Goods are having a tough time getting to market and prices for nearly everything are rising. Many believe this will work itself out over the next year as companies fully staff up and supply chains are working properly again. Some wonder if the economy is permanently damaged. The coming week will have inflation, retail sales and sentiment indices released. The madness is not likely to get resolved this week!

Worries about the Fed “starting to think about thinking about” cutting back their bond purchases knocked down stocks for a day, but the “buy the dip” crowd piled back in on Friday, pushing stocks to yet another record and 14th weekly gain in the last 19 weeks. Yes, there are some chinks in the armor, but the easy monetary policy is what rules the day. Over those 19 weeks, 90% of the stocks within the SP500 remain above their long-term average price, however the last few weeks, barely 50% are above their short-term average price. Meaning stocks have rallied so strongly that any short-term pullback has done little to dent the long-term picture. Within the S&P500 industry groups, all but telecom are above their long-term average, so until the market “technical” begin to break down in a more meaningful way, the path of least resistance looks to be higher. Growth has been the big winner over the past few weeks as interest rates have declined. Could the rate decline be warning the markets that the best/fastest economic growth has passed? Potentially, however, we would like to see a few more indicators pointing that way before beginning to worry about the next downturn.

The yield curve flattening is a warning sign of slower economic growth. However, without a signification push higher in the yield differential between junk and treasury bonds, long-term worries are not yet heightened. Earnings season gets started this week, and there will be plenty of commentary about what companies are seeing in their “end markets” and their capacity to fill demand. Finally, comments regarding pricing and inflationary pressures could also impact bond yields, pushing them back up if investors believe those pressures are more than just “transitory” as the Fed currently believes.

The quick rotation between “growth” and “value” has been driven by changes in interest rates. As interest rates rise, value does well. As rates fall, growth does well. Both are tied to the re-opening of the economy. If investors believe that the re-opening is going well and pricing pressures are building, value does well. If investors believe the best of the economic growth is now behind us and we are heading back to the recent average growth of 2%ish, then growth will do well. From a long-term perspective, growth is very overvalued, with various companies selling at their highest price to earnings multiples going back to 2000. While value is also expensive in absolute terms, relative to growth, it is about as cheap as it has been going back to the late 1990s. We believe that over the next few years, the overall market will struggle to provide meaningful gains, but that value should shine relative to growth as the economy slowly works its way back to “normal”.

Interest rates have been driving the markets as well as various parts of the markets for the past nine months and that is not likely to change. Hence, we will be watching yield differences between various asset classes for clues as to when markets are likely to make a significant shift. Not yet in the cards but watching closely!

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.

2:30

Nolte Notes 6.2.21

June 1, 2021

What was Hollywood’s six-million-dollar man is now Washington’s six-billion-dollar man. Inflation impacts everything! The new budget rollout late on Friday will be the starting point for wrangling about deficits (do they matter?), spending programs (remember shovel ready?) and initiatives the current administration would like to put forward. An interesting provision is an increase in capital gains tax rates that would be retroactive to April. While many are wringing their hands about the proposals, what gets passed, should make for some interesting beach reading this summer. Back at the economy, the inflationary figures continue to run “hot” as the economy continues to lurch toward a full re-opening. Supplies channels are still not operating correctly and are unlikely to get back to normal before year end. Employment is getting better as the weekly jobless claims’ numbers fell again last week. The coming data dump for the first week of June will include the “official” jobs report that should see some improvement over last month’s disappointing figures.

The markets continue to chug along, even in the face of data that historically would have had the markets falling. Higher inflation and large job gains are generally a recipe for hiking interest rates. However, looking at the bond market, you would have to shake a few traders to get them to move. Ten-year treasury rates remain below their March peak, and “risky” high yield bonds have traded well. Investors are amazingly comfortable with a Federal Reserve that has been buying large quantities of Treasury securities every week. Along with a commitment to keep interest rates lower for longer, investors have little choice but to buy equities to get any kind of return. That has pushed valuations of the equity markets to extremely high levels, rivaling those of 1929 and 2000. What is currently missing is a reason to sell. Until the Fed begins to discuss withdrawing from their purchase program, or we begin to see investors move out of risky portions of the markets, the momentum is still on the bull’s side and stocks can get pricier still. The warm sun calls and living is easy…for now.

After a very rough first quarter, bond investors have been rewarded with “staying the course” as returns have been positive in each of the last two months. Bonds have even given stocks a run for their money since late April, providing essentially the same return without the daily swings. If there are concerns in the bond market, it is that the bond model has swung negative, indicating the direction for interest rates may be higher in the coming weeks. The model has been negative much of this year and even as rates have moderated, they really have not dropped too far from their March peaks. Commodity prices are likely to be the key driver for interest rates going forward.

The markets have been swinging back and forth between growth and value for much of the past six months, however value has been the “winner” overall, as it has been two steps forward, one step back for value stocks. These are the parts of the markets that will benefit from the continued opening of the economy as we go from virtual meetings to in person, from FaceTime to face-to-face. There have been and will be plenty of bumps along the way, however the differences in valuations between these two asset classes tends to favor value ahead of growth. Comparing technology’s performance vs. nearly every other S&P500 sector shows technology’s performance peaking in the third quarter of last year and underperforming since. Even comparing technology to international, shows a similar relationship. The rotation away from technology is hard for investors to do, as the allure of high growth keeps them from moving. However, the valuation on technology stocks in general is well ahead of their historical norms, while valuations of other sectors and asset classes remain near or below historical norms.

“Sell in May and go away” is a Wall Street adage that historically shows the markets doing poorly in the summer. However, the last few years it would be better to hold the stocks and just go away. Will this year be any different? Or will the Fed keep the good times rolling with as easy monetary policy? Stay tuned.

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.

2:30

CIO Scott Martin Interviewed on Fox Business News 5.24.21

Program: Fox Business Tonight
Date: 5/24/2021
Station: Fox Business News
Time: 5:00PM

BRIAN BRENBERG: Well, for reaction, let’s bring in our panel, Carol Roth, former investment banker and author of The War on Small Business, Scott Martin, Kingsview, Wealth Management Chief Investment Officer and also a Fox Business Contributor. Welcome to you both. Glad to have you both. Carol, let me start with you. I’m looking at this so-called counter offer coming from Democrats, just one point seven trillion dollars. They came down 10 times more than Republicans apparently went up, according to Jen Psaki. This a counteroffer or is there even a negotiation happening at all right now?

CAROL ROTH: I mean, the whole thing is so insane, Brian, because their definition of infrastructure is so insane based on their definitions. I should be getting a gift card to Nordstrom’s shoe department because I walk around a lot to get from point A to point B.. I think the bigger issue here in the we came down this many percent versus this many percent, the big issue is spending. And we as citizens spend on average for our lifetime earnings just shy of thirty five percent of them in taxes. And in some places, people who live like in the state of New Jersey, it’s just shy of 50 percent. So we don’t need the government getting into any new spending. They need to be finding places where they already have money and shifting it for infrastructure, which should be a priority. All they’re doing, though, right now is saying, OK, well, who is going to pay for it when we should all collectively be pointing the finger back to them and say, no, we don’t want to we don’t want anyone to pay for it. We want you to be more wise with the spending.

BRENBERG: And Scott, you know, this latest proposal actually took down some of the actual infrastructure in the bill. The one thing that the bipartisan agreement would have needed, it’s actually removed here. But let me ask you this. I look at this thing and I say, here’s the strategy. Let’s get bipartisanship on a little infrastructure and take everything else and shift it to that reconciliation bill. And what does America end up with? Four trillion dollars in spending? Is that what’s happening here?

SCOTT MARTIN: Yeah, and that’s a number that it might seem like really small when we get done with all this spending, Bryan, because there’ll be bills beyond bills after this. Look, put me down on the gift certificate or gift card for the Shoe Department because it looks like we’re heading that way. I mean, Carol, and I know being in Chicago, the local issues that government has here on misspending tax dollars. And the other thing that worries me, too, Brian, you talked about bipartisanship. I mean, this is that whole mantra of the government saying we know what to do with your money better than you do on really anything. And one thing to think about is even the Obama administration and even saying that’s as old as time is, how about introducing like a private public partnership type of agreement where you can factor in the private partnership that we can get with local businesses, local experts, local workers, create actual real jobs and not get the typical waste, fraud and abuse that we see with massive spending bills like this. But instead, it’s all like, yeah, we’ll come with a compromise or an exception here and knock it down a few hundred billion dollars and call that a good offer. It’s shameful.

BRENBERG: You know, Carol, you wrote the book on the war on small business. I look at this situation right now. Big companies look at big government and they say, I can navigate that. I know how to work it. I’ve got contacts there. I know how to spend money there. But it’s small businesses who look at all of this spending and beyond that, all the taxes that are supposed to pay for it. And they say we’re the ones who cannot navigate this. We get lost or we get dictated to when spending like this happens.

ROTH: Yeah, I mean, if you think you want to come up with a definition of infrastructure, small business is the backbone of the economy that fits the definition better. But unfortunately, this is all intentional when you have pre-covid thirty point two million small businesses that are all independent minded and want to be left alone and don’t want big government, they are very hard to control. That stands as the polar opposite road block of central planning. Central planning wants to have a handful of big businesses and cronies to deal with. And so what happens? The small businesses end up as collateral damage. And so none of this is unintentional. It’s completely intentional. As you said, the small businesses cannot navigate all of these tax increases, all of these roadblocks to economic freedom. And at the end of the day, this is bad for each and every one of us and for our economy.

BRENBERG: Scott, I only have a few seconds left, but your thought really quick. Does this thing fall apart? And if so, are you happy about that?

MARTIN: Oh, definitely not happy about it, happy about it, the fact of it does fall apart, we don’t get this crazy spend that’s going to possibly come down the pike. I think eventually they’re going to work something out, Brian, but they’ve got to change the face of this thing pretty quick and pretty fast. Otherwise, it’s going to be a nasty fight

BRENBERG: Carol and Scott wouldn’t have anyone else to talk about this than you. Thank you for being here today. Appreciate it.

4:53

CIO Scott Martin Interviewed on Fox Business News 5.13.21

Program: Your World with Cavuto
Date: 5/13/2021
Station: Fox Business News
Time: 4:00PM

CHARLES PAYNE: As President Biden was meeting today with a group of Republican senators on infrastructure, Florida Republican Senator Marco Rubio leading another group of Republicans and saying, forget spending, it’s time to get Americans working.

MARCO RUBIO: Enhanced unemployment benefits are creating an incentive for people not to return to work until they expire because people are lazy, i’m not accusing anyone of being lazy, it’s because people are logical, because it’s logic that if you’re going to make close to what or as much, in some cases more than what you do in your work, you’ll go back to work when that expires. We have a labor crisis in this country.

PAYNE: All right, so who’s right here, I want to go to Fox Business contributor’s Scott Martin and Gary Kaltbaum, along with Optimal Capital’s director of strategy, Frances Newton Stacy. Gary K, I got a feeling I know what you’re going to say, but we’re sure we’ll be going more spending or more workers.

GARY KALTBAUM: Well, look, it’s unfortunate that the president said there’s no data. He can come to Lake Mary, Florida, and I’ll walk him into some restaurants and they’ll tell him exactly what’s going on. The theme parks are offering bonuses, and all you have to do is just go print out what all the states are giving before this extra on unemployment. There are some states that are paying out nine hundred dollars with the extra per week. So people are definitively staying home. I’m pretty sure the President knows this. I wish he would roll this back sooner rather than later. Why? Because there are a lot of businesses just getting off their back that can’t go one hundred percent because they can’t find people to show up at this juncture.

PAYNE: To be clear, the administration says they haven’t seen the evidence because they know it’s out there. They’re just saying they haven’t seen it yet.

Real kid. You know, Frances Newton Stacey, right. Turn around three o’clock. The biggest trend on social media is we are closed. In other words, the left now saying we’re not going to go back to work, even with the CDC guidelines, until we get more money. We feel like we’ve got big business on the ropes. McDonald’s raise their prices so we can still see a worker crisis.

FRANCES NEWTON STACY: Yes, we definitely could. I think what’s kind of weird is that taxes are going to go up, right? And these companies that made it through covid and God bless the ones that didn’t, the companies that made it through covid have a record amount of debt service probably on their books. And so I think that this sort of demand and supply in the hiring is going to kind of even out toward the end of the year. Also, I think that there is some other sort of, you know, headwinds coming in the system that might kind of even out the record amount of pent up demand that we’re seeing play out now. So this hiring thing could even out. But I do agree that it should be handled on a localized basis, because if you just cut it off at the federal level, you really do risk leaving some people behind. And locally, you can analyze that a bit better.

PAYNE: Yeah, you know, at this point, though, Scott, we’re talking about small businesses to Gary’s point, it’s gone on a long time. It was a noble thing to do. This has been this has been extended now two or three times. So the question is, do we need it right now?

SCOTT MARTIN: No, and I love how Marco Rubio used the word logic, like you don’t need evidence, I mean, it’s easy to ignore the evidence if you close your eyes. But like logic. I mean, I get it, too. If you’re getting paid to stay home or go out and party, go to the beach, whatever you want to do after you’ve been cooped up, by the way, thanks to the government for a year. Yeah, I would do that as well. I mean, I’ll say that right now. So the fact that we want to get this great reopening going, we want the markets and economy to enjoy a normalized environment, yet we’re going to keep this stimulus going. It’s just crazy to me. And it’s because the government wants to control you. They still want to have control. They still want to have you dependent and under your thumb for funds. And so as long as we are in this position, I’m now concerned, Charles, about this great reopening and the pent up demand that Frances was talking about, because there’s no way that demand is going to be satisfied if you’re a small business, a big business, if you can’t find the workers to service people.

PAYNE: You know, Gary, we just heard from President Biden at the top of the show, he came out, he took a victory lap, and he’s been in an awkward position because I think a big part of this is that they have to sell a certain amount of fear, a certain amount of urgency. There’s no way you can push through another four trillion in spending and at the same time say things are great.

4:24

CIO Scott Martin Interviewed on Fox Business News 5.12.21

Program: Cavuto Coast to Coast

Date: 5/12/2021
Station: Fox News Channel
Time: 12:00PM

DAVID ASMAN: Kingsview Asset Management CIO Scott Martin and former Dallas Fed adviser Danielle DiMartino Booth, Danielle first to you. We are heading into a full blown energy crisis. Can President Biden avoid the blame here?

DANIELLE DIMARTINO BOOTH: I do think the administration can probably get around this particular issue, there is gas in the pipeline, there will be relief. It will take a matter of days. There is a lot of panic buying going on. I’ve heard from from colleagues in Washington, D.C. that people have shown up at gas stations with empty plastic bags to fill up. So they’re hoarding gasoline. But it does appear that the Biden administration could have been a little bit quicker on the draw in terms of responding to this and and broadcasting the message that relief is on the way, regardless of what happens with the pipeline itself. So there was a delay and these types of delays can be very damning, especially in light of the current circumstances we have where where the policies of the Democrats right now, when adjusted for inflation, you actually have massive pressure on wages as well. Again, I know this story has been covered over and over because people are being paid more to stay home than they would be.

ASMAN: But we’re going to talk about that. We’re also going to talk about the inflation numbers, which shocked everybody today. But I want to keep on gas for a second and energy specifically, Scott, because just a year ago before the election, we were we were proud and happy that we were energy independent. Right now, the way they’re solving this problem is by importing fuels. We have to import fuels just to get enough for the gas stations. I mean, what a change in a year, by the way– Scott, what we’re looking at now, that’s that’s something a picture that I took on November 7th just after the election. Twenty twenty. The price of a gallon of gas in New Jersey was two dollars and one cent. Go ahead.

SCOTT MARTIN: Yeah, same here. Chicago is low twos as well, David, and now rocketing up towards four bucks, you’re right. I mean, nothing like giving up some of our national sovereignty as far as energy policy that Trump had instituted, which Biden has obviously rolled back and giving up that sovereignty so that we’re reliant on foreign oil. Again, I’ll tell you, Danielles, right. I mean, the messaging from this administration has really been the problem. I don’t foresee a major energy crisis coming, thank goodness. But look, let’s look what’s happened with the Keystone XL pipeline, other kind of, let’s say, iterations out of the administration against the energy sector. Those have not been good. Now, what’s been interesting, though, David, if you can believe it, is since the election and since the inauguration, one of the best sectors to own in the S&P. Five hundred has been, you guessed it, Energy. We own energy at Kingsview in some of our portfolios. I think that’s the way to combat, along with materials as well, some of this inflation scare that’s circulating throughout the market. And you’re seeing that in the stocks today.

ASMAN: All right. Let’s talk specifically now about inflation, Danielle. Consumer prices jumping four point two percent year over year. That is the biggest annual gain since two thousand eight stocks, of course, went down on the news. I’m just wondering where this ends. Is this just the beginning? Because as we were talking before, that doesn’t even count wage inflation, which clearly is coming as a result of trying to lure people back into those jobs that are waiting for them.

BOOTH: So, you know, I think the real problem here is not necessarily that four point two percent headline, but we had zero point nine percent increase in the core CPI, which the Federal Reserve pays very close attention to. That’s the biggest increase since nineteen eighty two. So again, it’s going to be about messaging. Vice Chair Richard Clarida, what’s on the wires today, saying that he was, quote unquote, surprised by the increase in inflation. We can’t not have the people, the Federal Reserve saying out loud that they’re surprised. We knew that base effects were coming, but the month over month changes in and of themselves are extraordinary and in large part do reflect kind of a confluence, if you will, of all of the supply chain disruption, the shortages that we’ve seen everywhere. In addition to spring break, we saw airlines and hotels, those types of prices go through the roof. That’s because a lot of Americans splurged, went out, got out of the house, hit the road in March, during spring break, because they could. So, you know, again, there needs to be more clarification and certainly not any surprise out of Federal Reserve officials.

ASMAN: Well, and, Scott, the fact is, is that we’re forgetting the main factor here in my mind, which is government spending. I mean, we’re spending trillions and trillions and trillions of dollars. When you do that, you get inflation, right.

MARTIN: To some degree you do, David, I do believe, though, and I agree with Federal Reserve Chairman Jay Powell in saying that is a transitory type effect fact. I mean, I, I kind of challenge or channel my inner Milton Friedman here by saying inflation over the long term, David, is more of a monetary phenomenon. As Danielle hit on. That’s got to be something that’s more wage related, which, yes, I think is starting to come back. But technology is providing some sort of deflationary environment. Counterintuitive to that. The last thing I’ll say, though, to David, you know, pushing, gosh, what is it now, 30 trillion in national debt. We’ve printed, you know, almost 10 trillion or looking to print 10 trillion. Now in the latest covid relief stuff, if you add it all up correctly, if we are to pay that debt back, David, we’re going to need inflationary dollars to do that. We have to pay back that debt with cheaper dollars. So we actually better hope for some inflation down the road. Just not crazy.

ASMAN: You quoted Mr. Friedman, Danielle. I’m going to quote him, too. He said, Inflation is very simple. It’s too much money chasing too few goods. And right now we have a lot of extra money in the markets because of the Fed buying up those bonds. And we have a lot less goods because we can’t get people back to work.

BOOTH: You know, it’s a terrible combination, and I think that if the administration and if the Democrats don’t understand at this point that too much stimulus money can be a bad thing for the economy, it can produce unintended consequences.

ASMAN: But the president and forgive me, the president doesn’t get it. The president is saying it’s not related, that the the money that we’re spending on keeping people at home is not related to the fact that we have eight point one million unfilled jobs. He said there’s no connection.

BOOTH: Then he’s not connecting the dots. It’s pretty simple map, the average American right now is getting paid seventeen dollars and fifty cents an hour. That’s just what the unemployment benefits don’t trust. I’m not even talking about rental moratorium evictions. Right. Just just look at that. It’s simple math, president by simple math.

ASMAN: All right. Well, we’ll wait and see if he wakes up or the administration wakes up to that simple math. Good to see you both, Danielle. Scott, thanks very much. Back to what?

6:54

Nolte Notes 5.10.21

May 10, 2021

“Jobs, jobs everywhere and not one to be had”. With apologies to Samuel Coleridge, the jobs report on Friday was in stark contrast to the news earlier in the week of large drops in weekly jobless claims. Employment reports embedded in various survey data also indicated that payroll gains would be close to 1 million, not just a quarter of that guess. Given the huge whiff, it would not be a surprise to see stocks take a header and drop a few percentages. However, they rose nearly 1% as investors feel the monetary spigots will remain wide open, fueling further stock gains and potentially higher inflation along the way. Excuses for the miss abound, from lingering fears about covid while heading back to work, schools still in hybrid and parents needing to hang around the house while kids are home. Finally, some point to the generous unemployment programs that are keeping potential employees at home until at least September, when the benefits are set to expire. Of course, the weaker report emboldened others to push for even more benefits.

The economy is in a strange place. Manufacturing is running full out and having trouble finding “stuff” needed to make their “stuff” (hence the rising prices on various inputs like steel, copper, grains, etc.). Services are beginning to come online as restrictions ease. Yet they are having trouble finding workers and still have capacity restrictions and higher prices for their needs (like jet fuel and foodstuffs). Housing is booming as many are leaving the larger cities and heading to the ‘burbs. Lack of building (and higher lumber/copper prices) has pushed up home prices at a pace last seen in ’07. GDP growth was over 6%, yet the calls for more stimulus and keeping the Fed’s rate policy in place were heard following the report. The key question is whether the combination of the enormous stimulus package (as well as the one proposed) and higher input prices for all sorts of goods will indeed be “transitory” or much more lasting than is presently assumed. Inflation in the financial markets have been deemed a good thing, however now that it is spilling over into the “real economy”, it could pose problems for officials.

Bond investors cheered the poor employment report, as they believe the easy monetary policy will continue for longer than expected. Since hitting 1.74% in mid-March, the 10-year Treasury yield has eased to 1.60%, trading in a very narrow range. If the bond market is indeed worried about inflation, it is not yet showing up in yields. Even the spread between short and long-term bonds has contracted when it would be expected to expand as the economy heats up. Investors in low-grade corporate bonds are not worried either, as high yield rates are their closest to Treasury yields ever, meaning the margin of default risk has never been lower.

Even with the much lower-than-expected job growth last month, the “re-opening” trade in the market continues to lead the way. Small US stocks and large US value have been out in front much of the year and have regained their leadership roll over the past two weeks. The dollar has weakened as well, allowing international investments to lead their US counterparts. A concentrated portfolio of US technology stocks has been the big winner over the past decade, starting in the depths of the financial crises of 2008 and (likely) culminating with the rollout of the vaccine late last year. Investors are paying a hefty premium for growth, as the average price to earnings for growth is 30x, 50% higher than that for value stocks. Both are at historically high levels, but for those that need to always be fully invested, the near historical difference between the two would argue that investors should be buying value and selling growth. The “reversion to the mean” trade would help investors who have a diversified portfolio of large/small/international holdings perform better than the averages, which are still dominated by large growth names.

The circular argument of “why are stocks going up? Because people are buying. Why are they buying? Cause stocks are going up”, will come to an end at some point. There are not yet any hints that stocks are going to do much more than correct their torrid run this year. A large “wow” drop is not yet in the cards. Still scanning the horizon for signs though…

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.

2:30

CIO Scott Martin Interviewed on Fox Business News 5.7.21

Program: Making Money with Charles Payne

Date: 5/7/2021
Station: Fox Business News
Time: 2:00PM

CHARLES PAYNE: Want to bring in Kingsview Wealth Management, CIO Scott Martin, along with the managing partner of Veritas Financial, Greg Branch. Scott, you know, how has today’s big miss with this jobs market report, how has it changed the way you looked at the market? Because I think everyone model for a number of months higher than this. So what adjustments are you making?

SCOTT MARTIN: Yeah, I mean, Charles, I like the narrative and the imagery, even talking about baseball-related. I mean, we haven’t seen a swing and a miss like this and say, Rob Dear, one of my favorite baseball players of the 80s was playing for the Detroit Tigers. And so if that doesn’t explain how big of a of a swing and a miss this was today, it does, though, show you that, look, we’re in a volatile environment for data. I mean, Charles, if you look at personal income data, you even look at some of the inflation data, look at the personal savings data. A lot of this data is volatile right now because we’re doing this struggle, this push and pull, as you and Brian talked about, with the government opening the economy or the government seeing helping the economy, if you will, by providing stimulus or actually the economy naturally opening and operating on its own. So the data is going to be in this push and pull environment for me. I think you’ve got it taken for our money. It keeps you in the portfolio we’re managing. You have to take days like the last couple of days leading to this jobs number. You have to take days like we’re going to get in the next couple weeks as we go through the rest of earnings season to buy companies that are down, you know, by on volatility, try to find these companies and get the shopping lists out. And together they’re are going to give you opportunities when things just fall too much. And then that’s when you’ve got to solidify and fortify your portfolios.

PAYNE: Greg, have you made any changes to just your overall thinking since this morning and these numbers,

GREG BRANCH: Counterintuitive as it may seem Charles, this was actually reinforcing for my outlook and actually gave me reassurance. Look, we always knew that there would be a very strong back half story that estimates are too low. And we’re moving up the vaccination curve quick, more quickly than we thought. That’s great for the company earnings. That means that we can have performance without multiple expansion from here as the earnings go up. And so, you know, we had a massive 500000 jobs last report. It was just the other way. And so what this underscores is that these things aren’t linear. They’re episodic. There will be push and pull. But the market is taking a breather, as you saw in the yield on the 10 year, that inflation is going to be less of a challenge than we originally thought a week ago or three days ago when Secretary Yellen was advising of a change.

PAYNE: Well, speaking of Push-Pull, right now, Fidelity has two charts on the last day or so, and I think they’re very intriguing. One overlays the stock market now against that period going into the Great Recession, suggesting that we’re on the cusp of a crash. The other one shows a correlation between the stock market and bonds in the 1960s. This one suggests that we’ve got at least five years left on the rally. So, Scott, which one are you leaning toward the most?

MARTIN: Well, the answer’s somewhere probably in between now. I love these numbers and data that come out and tell you the crash is going to happen Monday or next Friday or June twenty-eighth my birthday. Now, that’s and you can send gifts any time you want. But the reality is this, Charles, we’re going to have these phases. I mean, we’ve had him already this year. We had him a little bit even towards the fourth quarter of last year, where it’s going to feel like this is the big tipping point. This is the tip over. But I believe that we’re in a position where we do have lower interest rates still. Yes, they’ve gone up. Earnings are absolutely awesome. So if we do to the point that was just made, if we do get oh my gosh, some multiple expansion, I’ve told you, Charles, our target could be S&P. Five thousand, believe it or not, because we’re going to get some of the multiple times on that that we need to get there to that level. And I believe also to the fact that the government hopefully will let the economy take over for this thing versus take all the control that they’ve had for the last year.

PAYNE: Greg, I would have posed the same thing to you, but also you mentioned earnings, in fact, the earnings, multiple earnings growing into these

multiples. We’ve got four hundred nineteen S&P companies that reported coming into today. This has been an astonishing earnings season. Eighty-seven percent beat earnings, a 50 percent climb on average. Seventy-seven percent beat on revenue. It’s just absolutely phenomenal. And consequently, the subsequent quarters, the estimates are going through the roof, but it hasn’t been reflected necessarily in the market. Are you seeing, Greg, that maybe this will start to be reflected like, you know, these stocks that didn’t necessarily go up, even with some that went down may turn around and work the way higher because of earnings?

BRANCH: I think we’ll know better in another month or so. Charles, there are two things we need to look out for. One, we do need to see where the inflation is coming out, because if it is a lot more acute than the Fed is expecting, despite the relief we got today, they will have to change their posture on rates, two. We are just coming up on some of those really difficult compares. And I think that investors will wait to see if there still remains a real tailwind, even as people are back to work and back out outside their homes. And so I think the market will need to see that to have confidence that there are some significant tailwinds outside of covid for that to happen.

PAYNE: All right. I’m going to ask you then, a month from now, the same question, but right now we’ve got to leave it there. Scott. Greg, by the way, Scott, give me a give you a shout out in gold, one of the top-performing ETFs this week, one point six billion dollars went into it. You talked about staying the course. It broke through eighteen hundred. Congratulations, both guys. Have a great weekend.

6:54

CIO Scott Martin Interviewed on Fox Business News 5.4.21 Pt 1

Kingsview CIO Scott Martin discusses market expectations and the response to recent tech earnings reports.

Program: Cavuto Coast to Coast
Date: 5/4/2021
Station: Fox Business News
Time: 12:00PM

NEIL CAVUTO: Meanwhile, do want to draw your attention. We are showing the Nasdaq for a reason, down three hundred forty-five points right now, led by big declines in the likes of Amazon and Microsoft and Alphabet and a host of others. The heavyweights that were leading the parade are now leading the exit from the parade for now. Scott Martin, Kingsview Asset Management. We’ve got Jack Macintyre, Brandywine Global Portfolio Manager. Scott, to you first off, If I had a dime for every time I’ve seen the Great Correction and ensue technology stocks and titans. I’d have a lot of dimes right there. So the latest argument is they’re coming back to Earth because interest rates are rising. Capital gains taxes could be rising. A good excuse to sell these high flyers while you still can make some money. So is this time any different from some of the prior.

SCOTT MARTIN: Yeah, and you could have made a few dimes plus, Neil, if you actually bought into those corrections and actually tried to avoid the fear trade that was out there in the selling and actually take advantage of lower prices. Look, these tech stocks, these high flyers, these momentum plays don’t like the notion of higher interest rates. We’ve learned that a lot this year. Here’s the one discouraging thing, though, Neil. The companies you mentioned earlier on, the Apples, the Googles, the Microsoft, the Amazons, all had blowout earnings of recent notes the last couple of weeks or so. Some of the earnings reports that these companies had were amazing. And the company stocks have not gone up since they went up for like a day after and then pulled back considerably in some cases sense that’s a little discouraging from the standpoint of what the market was expecting, what the market got and what we’re seeing from the stock prices themselves.

CAVUTO: You know, maybe adding some soul to the selling wound today, Jack, was this news out of Janet Yellen at this Atlantic conference in which she said that rates would have to raise somewhat to keep the economy from overheating? I don’t think she said anything that the average market watchers would be stunned by, but maybe coming as it does a week after we heard from the Fed chairman, the president, Fed Chairman Jerome Powell, say that that was unlikely. I’m wondering what’s going on here. What do you think?

JACK MCINTYRE: So, you know, we’ve had rates move up pretty significantly since August of last year than in February and March, the long rates really started accelerate. So, you know that I think that’s sort of reflective. Neil, one of the things I think might be going on as we get into twenty twenty one, you know, markets are forward looking. They’re going to start looking at twenty twenty two. Hey, we’re we’re probably at peak economic growth, peak earnings growth, you know, and certainly a peak fiscal stimulus. So I don’t know. And I’m again, I’m not trying to pick a top in the market, but I just to me, it kind of makes sense that we start to see maybe a little bit more two way flows in certain sectors. And tech is certainly one of those.

CAVUTO: Yeah, you know, it’s hard to glean trends in a market like this, but it’s one that bears watching and we’ll keep watching it Scott and Jack, thank you both very, very much.

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