Kingsview CIO Scott Martin discusses the young investor’s viewpoint and how it differs from older investors. He also talks about the current administration and Federal Reserve’s role in current market conditions.
Program: Cavuto Live
Station: Fox News Channel
NEIL CAVUTO: With the backdrop of inflation. You see it certainly in the prices of schools and colleges, public or otherwise. But there was a sign that maybe things are getting a little better, or at least the rate of increase we’re seeing in inflation now. It only a 6.3% annual rate is a sign Better Days are here to come that in other words, the rate of increase is slowing down. That had all the major market averages advancing. In the case of you’re keeping track of this right now, it had been eight down weeks in a row for the Dow, seven down weeks in a row for the S&P 500, both dramatically disrupted this past week for the month of May, by the way. And we have only one more trading day. Remember, there’s no trading day on Monday for Memorial Day, but on the 31st to the last trading day now the Dow and the S&P 500 have indeed turned positive. So what to make of all of that and where we go from here? Let’s go to Phil Flynn, the Price Futures Group, senior analyst, FOX News contributor as well, Scott Martin King Asset Management and Gary Calpine, Capital Management. Gary ended with you begin with you on what the markets were telling us. You know, this was one of those rare weeks where every single day the markets were advancing, at least the Dow was on the belief that maybe we’re through the worst of it. Are they naïve or are they prescient?
GARY KALTBAUM: I think what we have is a combination of, believe it or not, in less than two months, the Nasdaq had dropped almost 25%. In the S&P, 18%. So maybe an overshoot. But the PCE inflation rate for the first time in six months actually ticked down. So I think maybe the market.
NEIL CAVUTO: By the way that’s a personal consumption expenditure rate, you know, this stuff is got, but it’s a key gauge. I know the Federal Reserve follows, right?
KALTBAUM: Yeah. And it’s it’s what people spend the actuality of it. So I think a combination of that and you just get to the point where sellers get washed out, the short sellers in the markets are too happy. So they’ve got to put the frowns on the faces of the short sellers and get the Bulls all excited again. I’m not sure if this is a bear market rally, the start of something really good. I am still very worried about two things that are happening at the same time, and that is savings rates are plunging and credit card usage is skyrocketing. While even though inflation came down a little bit. CRB Index at a new high this week. And another thing with energy prices, oil went into the levels where we saw when Russia attacked Ukraine in mid-March. We’re not at the highs, but we’re starting to enter that fray. And if we start entering one 21 – 25, all bets are off. And the best analysts, energy analyst Phil Flynn will attest to that.
CAVUTO: And I will go to filling in just for folks at home who follow this stuff or try to when Gary talks about short sellers, those betting on stock prices declining, they’ve been richly rewarded save this past week. And the CRB to which you referred is the Commodity Research Bureau. It’s an index, a whole bunch of different commodities here that has been sharply rising, did not do so in this past week or not nearly as dramatically. Phil Flynn A big issue with inflation is gas and oil, natural gas, all of that stuff that’s been jumping. Now, we’re supposed to be relieved because it’s not jumping as much. But what do you say?
PHIL FYLNN: Yeah, absolutely. Because, hey, what do we go up 17 days in a row and we finally went down 1/10 of a penny and then we hit another record again back up in the new record. But yeah, I do think that that is some encouragement. It looks like the market is starting to level up and it even looks like the Biden administration is even considering some real changes that could actually help the situation. There were reports that the Biden administration is looking at perhaps reopening some of the shuttered refineries that basically some of their policies have closed down.
CAVUTO: I believe that when I see it Phil. You know, I don’t want to get ahead of myself here, but we’ve heard these teasers before. If it doesn’t happen, won’t oil just keep rocketing?
FYLNN: It will. You know, unless we change the policies we’re in, Neil, I mean, we’re doomed to repeat the same cycle that we’re in. Listen, we’ve we’ve depleted our backup reserves. We’ve we’ve sold out our Strategic Petroleum Reserve that was supposed to bring prices down. It had the opposite effect because people look at US inventories, they used to say, well, you know, even though they’re low, they’ve got all this oil in the reserve. That’s not true anymore, you know.
CAVUTO: Not as much or not as much. You’re right about Scott Martin from a young investor’s point of view, and they’re the ones who got into this market late and we’re told we’re were the ones leading getting out of this market sell off fast. What do you tell them?
SCOTT MARTIN: Yeah, it’s definitely not me. I’m not telling myself because I’m much, much more years in advance there, Neil. But I’ll tell you, after listening to the guys here so far, Gary and Phil, all due respect, I’m depressed. I mean, I had a a full week and a fun plan here. And that’s dashed because I think to your point. The young investor I think is going to be okay, Neil, because they have time. They’ve got time in the market. They’ve got time to dollar cost average. They have a hopefully a long runway of income ahead of them where they’ll be to put new money in. But gosh, I mean, we work with a lot of middle age to older, say, investors who are scared. They’re scared about bonds. They’re scared about income, and they’re certainly scared about stocks. And I think the one thing you mentioned, Neil, in your intro that was striking to me was talking about how things are getting better and they aren’t. They’re getting better because granted, things got so bad as Gary kind of put them. But isn’t that kind of screwed up in a sense because of the fact that the administration and the Federal Reserve have really botched this from day one? I mean, you have an administration, a President, Joe Biden, who doesn’t know how much a pound, a pound of ground beef cost. He probably doesn’t know how much a barrel oil is, certainly doesn’t know how much a gallon of gas is at at the tank. So at the pump. So it’s just like you have an administration, you have people in control who are supposed to, I guess, in quotes, take care of us or at least help things or get out of the way. And all they’re doing is messing things up at every turn. And therefore, while we’re seeing a bounce, it’s not something that I think is sustainable as long as we have these folks in charge.
CAVUTO: You know, and that a president yet who knew what the price of milk was. But that could just be me.
MARTIN: We should change that.
CAVTO: We could change that. Guys, thank you very, very much.
Reuters interviews Paul Nolte, SVP & Sr. Portfolio Manager
Kingsview SVP Paul Nolte discusses how data points toward the idea that the Fed will be in the market raising rates, and at some point during that rate hiking cycle we’ll likely see something break in the economy.
Kingsview CIO Scott Martin discusses buying opportunities, volatile stocks and the electric vehicle space.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: All right, at such a loss for the Dow here, we’re still waiting, by the way, on really in the electric vehicle maker backed by the likes of Amazon and Ford. This one has been a fascinating story to follow because it was originally going to be priced in the 72 to 74 bucks a share level that was essentially doubled from the early talk. And then now they’re saying, you know what? It does debut maybe a hundred fourteen or fifteen dollars a share. So this thing’s like a rocket here, although we be watching it closely. But again, still waiting for that debut, a good opportunity to talk to Scott Martin back with us right now. Kingsview Asset Management. You know, it’s got the right IPO at the right time can tell a lot about what clicks with investors too early to say, whether that you know this electric vehicle maker will be right. But it does seem to get the advanced positive buzz. How do guys like you decide where attention is warranted and where maybe standing back is just as well?
SCOTT MARTIN: Yeah, I think get a look at the space first and foremost, Neil. As far as where some of these companies are located, you mentioned that this happens to be in the electric vehicle space, which is very hot. Obviously, the price is being chased up as we speak. So that’s an area where I think you’ve got to start with respect to where the company is operating. And then secondarily, look at the pricing. As you mentioned, it’s already called up another 30 points above the initial IPO price. Usually don’t chase things like that, but companies that actually come in say around the appropriate IPO valuation, those are companies that we like to buy into because usually the chasing starts happening after they start publicly trading.
CAVUTO: You know, a lot of people get into ideas of all sorts here, and that does seem like you just stated to be a fairly, you know, reliable rule of thumb that the faster you come out the gate, sometimes the more problematic, the longer term. Conversely, you know, sometimes when you stumble, coming out of the former Facebook comes to mind. It took, you know, almost a year before things stabilize and then it was off to the races. All these controversies notwithstanding. Do you play these at all or do you just hold off until the dust settles?
MARTIN: We do play them. You mentioned Facebook. What a great buying opportunity that was felt by about 50 percent. And then those who were lucky enough to scoop it in the high 20s did very well. Bumble is a recent one that did that as well, Neil. And then, of course, Airbnb as well, and DoorDash too. So we do play in that space. But as you mentioned, I mean, some of these things come hot right out of the gate, and they’re just not good stocks to chase. But as long as they come back with some relative valuation, as you mentioned with the latest IPO that we talked about just a second ago, I mean, they’re losing money hand over fist every quarter. So we don’t chase ones that aren’t as fundamentally strong. But there are companies out there coming public that are attractive.
CAVUTO: You know, that’s to Tesla for a second electric vehicle players. But you know, the stock lost about $2 billion in market value over the last couple of days. And now it’s up about it looks like at about 40 bucks or so, it’s around one thousand sixty four a share. But what’s interesting is it all started with Elon Musk, you know, putting out the Twitter this poll to say, I think I should sell some stock up to 21 billion. He lost more than 50 billion on paper in the interim. But it does remind you how dependent that that stock is, you know, joined at the hip to its owner.
MARTIN: Yeah, I mean, he is a rock star, and so what he does affects all aspects of the company and certainly the stock price. It’s kind of funny how he did take the the poll or the opinion of Twitter. It end up costing him more than he actually sold. But the reality is that stock’s volatile and it’s at some near all time highs, and therefore it’s going to move around quite a bit. But that space, the electric vehicle space is so hot that that company is going to do very well, especially with a lot of the cars that they have coming down the line.
CAVUTO: Thank you, my friend. Scott Martin. Following all of these developments.
Kingsview CIO Scott Martin discusses Fed support, inflation, and whether the market is toppy. He also talks about temporary weakness in pockets of stock and what that means for long-term investors.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: I want to bring it two market watchers with us, Uma Pattarkine. I’m close. I got an eighty five percent. The next one I’m on. And by the way, it took me like seven times to get Scott Martin right, too. So don’t feel bad. Let’s pick up on this conversation. It does feel like the market the stock market is entering this post COVID 19 world. And if that’s the case, how does that inform how we invest, how our portfolios humor should look?
UMA PATTARKINE: Great to be back, Charles, and yes, you know, as we talk to our institutional clients around the world, that’s what we’re really focused on today, right? Not what happened in the last two years, but where we see things going in the next five to 10 years. And so we’re really focused on some of these big thematics that we see really moving the way that demand patterns are coming through. And so one of those things that we’re focused on, for example, is e-commerce, right? We’ve all gotten used to expecting that shipping order in front of our doors in two hours, right? So that’s why Amazon has kind of trained us to do. And so that means that retailers are really trying to get their supply chains built out so they can meet those demands. And that means a ton of demand coming through for industrial real estate. So those are the types of thematics that we’re really looking to in the future.
SCOTT MARTIN: Yeah, I agree. I think our time horizon, though, just given all the uncertainty out there, at least as far as how we’re managing money is a little shorter just because we can be a little more certain, maybe about the short term, I think. But I’ll tell you, I mean, look at look at Fed Chairman Powell’s testimony yesterday, Charles. I mean, they’ve had an extraordinary amount of support to this market. That’s been one reason I think amongst many why the market’s been able to hang in here so well. And now they’re just starting to step back a little bit from, say, all that liquidity purposes that they’ve provided the market. So just be a tapering. I mean, when it was pushed to talk for him to talk about raising rates next year, talking about inflation, he was still using the word transitory, in fact debating how the word transitory should almost be used in the dictionary. The reality is, the Fed still wants to be here. This the Fed wants to be ever present. They know the market needs them. And I don’t think the Fed’s going to raise rates for the foreseeable future as long as inflation, which is still going up, by the way, but at a decreasing rate. And that’s important to note as the Fed continues on their mandate.
PAYNE: So, you know, yesterday, of course, we covered the FOMC meeting. What was really interesting. I wanted the audience to take a look at this. The heatmap, the S&P heatmap. You can see a lot of red on that screen, right as the FOMC decision was being made. But then at the close, it was almost all green. So explain this to me. Stocks are going up. Bond yields are going down. You know, that doesn’t speak to an aggressive fed that doesn’t speak to a lot of rate hikes next year. So, so what’s happening here?
PATTARKINE: Exactly what you sent, Charles, right, so the crux of that message from the Fed was like Scott was mentioning, there’s still going to be here, accommodative policies here to stay. Right. And so what that means is that your kind of economy is on good footing, but we still have a lot of support. And those rates really aren’t looking to be increased in this near future. And we’re hearing that same type of commentary from central banks around the world, right? So we’re seeing those rate expectations get a little bit reset. And so what that means for investors really is two things, right? So first is that we need to find yield and income somewhere else, not fixed income. And then the second is something that we spoke about. Charles and Scott touched on it and that inflation is here, right? And so investors really need to be focusing on hedging against inflation and making sure that they’re finding some yield somewhere else. And we’re seeing real estate as a great place to do that.
PAYNE: Lots of signs. And you don’t have to be a real market expert, right? It even be a casual observer that maybe the market’s getting a little toppy. You know, some experts look at things like our relative strength that right there is flashing a signal, maybe an impending pullback. Of course, there’s a fear and greed index now at eighty eight. Obviously, some would say that’s too optimistic. Scott, do you buy this notion that the market, first of all, that it’s toppy and if it is stopping, you know, do you make changes in your portfolio? Do you say so what? Sometimes it’s got to go down.
SCOTT MARTIN: It does, and you take that as a long term investor to add to positions if you have the free cash. It’s toppy, Charles and broad based markets, but there’s areas, pockets of stocks, let’s say, that are falling back on earnings reports or other news that you have to pick up because they’re weak temporarily. And just adding to some of the indicators you mentioned. I mean, look at stochastic, look at Max D histogram. I mean, that said, if I look at VIX two, there’s not a lot of fear out there. And these are times that worry us a little bit if you’re trying to market time, because I believe that these are levels that will get some pullback in, and that’s when you got to come in with some of that free cash.
PAYNE: All right. Irma Peterkin and Scott Martin, thank you both very much.
Program: Cavuto Coast to Coast
Station: Fox News Channel
DAVID ASMAN: But first, inflation and inflation, is it permanent or transitory? That is the question the Fed is debating as we speak right now. We’ll hear about their decisions coming up. But markets are on edge, waiting to hear whether the central bank will pull back on its money printing sprint. Our all star panel is here, Kingsview Asset Management CIO Scott Martin, Fox Business correspondent Susan Li, and Through the Cycle, president and founder John Lonski. A great panel. Thank you all for being here. So, Susan, what are the markets expecting? They seem not to not to be too certain about what’s going to come up.
SUSAN LI: Yeah, well, what does transitory mean? Because before you’ve heard the Federal Reserve say maybe two to three months and now is it for the rest of this year? We know that inflation has run hot now for the past three months. You have a five percent increase in prices, consumer prices, the fastest, two thousand eight. So I guess the discussion is when do they take away the punch? Bowl is a twenty, twenty two. And then do you get the first interest rate increase in twenty, twenty three? I think the markets are passing and looking for some sort of wording from Jay Powell later on today.
ASMAN: Scott, which way. You bet.
SCOTT MARTIN: Expecting not much, David, actually, I think the real news is going to come out in the Jackson Hole meeting in a few weeks here, but I’ll tell you what else is going on here, David, is you talk about this transitory notion of inflation. Susan’s right. The setup is exactly correct. It was a couple of months and now it’s several months. And as long as they keep using that word along the line, I guess it’s still transitory. And I’ll tell you, interest rate projections are hard to handicap right now because we’ve got softening economic growth coming down the pike here in Q4 and Q1 of next year, which probably puts off the rate hike at least another six months into two thousand twenty two.
ASMAN: Well, John, earnings, of course, are looking in the rearview mirror, but we have these spectacular earnings yesterday, almost 60 billion dollars between three companies, Microsoft, Apple and Google or Alphabet, as it’s now called. So you had these spectacular earnings from the high tech companies. You still have a lot of demand out there. There’s this pent up demand. People with a lot of cash, they want to spend it. But you have a labor shortage. You have you have inflation. You have certain pushbacks on supply, supply chain, mess ups and and strangulations going on. So. So what’s your bet on what the economy is going to be doing in the months to come?
JOHN LONSKI: I think the economy’s going to slow down. We have had a number of downward revisions for predictions of economic growth during the second half of this year. You know, we had, for instance, GDP now by the Atlanta Fed earlier. They thought that the second quarter and we’re going to get a report tomorrow on second quarter GDP, the second quarter GDP growing by something faster than 10 percent. Since then, that forecast has been lowered to seven point four percent. Basically, David, what is happening is that price inflation, higher prices are beginning to take their toll of household expenditures. The best example, housing. New home sales in June were a disaster, down nearly seven percent monthly, down 19 percent from a year ago, despite still very low interest rates. I think the Fed is quickly finding that it’s going to be between a rock and a hard place. If it hikes rates to try to cool inflation, it will hurt the economy. If it does nothing faster, price inflation will lead to pullbacks by consumer spending.
ASMAN: But, Susan, they’re going to have to rewrite their mandates, if that’s true, because they have two major mandates. One is for price stability. As we talked about, there isn’t much price stability right now. Inflation is going up. There are even signs that it could be double digit next year if if that’s conceivable that we could go back to the late 70s. And the second mandate is on unemployment. Well, we have nine point three million unfilled jobs. Yes. They might not be paying as much as the government is for unemployment benefits. But the point is we don’t have an unemployment problem right now. So is the government just getting in the way
LI: And finding the workers to fill those jobs? And they also say that there’s a Fed put out there being that there’s a third mandate, which is to protect the stock markets, because a lot of people on Wall Street says that if we see the stock market fall 10 percent, you bet the Fed will step in at some point, as we saw in the depths of March last year, which they should have done. But, yeah, there are concerns that right now maybe the economy is running too hot. There are a lot of jobs out there, not the right people to fill it. And maybe it is time to take away the punchbowl. Now, if you take away stimulus, it doesn’t mean you can’t be reinstated once you see some sort of slowdown or some sort of hiccups in the economy.
ASMAN: But but but right now and again, Scott, it has to be the last word. I’m sorry, John. We’ll get back to you. We’ll start with you the next round. But but the fact is, is that we have the government just getting in the way of this amazing emergence from from all of the lockdown’s, which was creating all this spectacular growth. I’m wondering if the government is causing more problems than they’re solving right now
MARTIN: For sure, David. And creating new problems every day. It’s the classic case of government knows best. Government knows how to do best with your money, not you, yourself, the business owner or the spender. And that’s really where I think we’re at this crossroads here, because the Fed has done what they needed to do. The government has gotten in the way and created more inflationary pressure. And they seem to keep doing that with some of these crazy spending packages that have yet to be passed through Congress.
ASMAN: A panel this good should not be missed in their second round, which is coming up later in the hour. Good to see you guys.
Money Control interviews Paul Nolte, SVP & Sr. Portfolio Manager
Paul Nolte discusses strained supply lines, the timeline for rebuilding them, and what that might mean for inflation.
Kingsview CIO Scott Martin discusses how the stimulus is baked into the market, and why Chairman Powell Chairman Powell will need to stay on the path he’s on for the time being.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: You know, this is a big what if, but what if this whole thing fails? What if it goes kaput? What if they don’t get their differences reconciled and that one point nine trillion-dollar stimulus plan, the sort of the battle holy grail for this new administration, what if it just doesn’t happen? What would be the fallout? Scott Martin, Kingsview Asset Management. Susan Li, our superstar here at Fox Business. You know, I got to wonder, Susan, since the markets have factored in that it’s going to happen. It’s unlikely that it doesn’t, but it could. I mean, there were already a number of Republicans who’ve got at least a couple of Democrats with them worried about the price tag, worried about jamming in some of these other features. So then what?
SUSAN LI: Yeah, what a tangled web we weave, right. Thought you’d like that – that was for you Neil. So, yes, I think the markets are anticipating some sort of stimulus, whether it’s one point nine trillion or just a few billion. I think they pretty much said that you have to follow the money, and the money is telling you that there’s going to be money printing coming from either the White House and the government administration or from the Federal Reserve. As you’ve heard two days now with Jerome Powell, the Federal Reserve chair in front of Congress. So I think people are anticipating something. And don’t forget, you still have another trillion-dollar package infrastructure that will be also discussed and pushed for apparently already by the White House. So I think Wall Street needs something.
CAVUTO: If they don’t get it, Scott, of course, Mitt Romney has a column today ducking and bemoaning about all the issues that others are ignoring, that a lot of this is backloaded. A lot of this spending seven hundred, eight hundred billion dollars worth is meant for twenty twenty-two. So this idea that we urgently need it like now, now, now isn’t out there. So, again, I’ll ask you what I asked Susan. If this doesn’t come to be because the trip-ups on these issues, how will the market respond?
SCOTT MARTIN: It’ll feel a lot more than just a simple insect bite, Neil, where you can put some cortisone on it and take care of it in a few days, because if you want any evidence of that, I’ll tell you. Look, yesterday, yesterday, the Nasdaq is down about three and a half percent in the morning. Fed Chairman Powell comes out and starts talking about, don’t worry about inflation. We’re here for the markets. Unemployment is still terrible, et cetera, et cetera. Meaning we’ll be there for you, Mr. or Mrs. Market, as well as his partner in crime, Super Dove, Janet Yellen, treasury secretary, who’s been out talking about more stimulus, more trillions, wherever we can find it, print it, sell it and send it out. So the reality is, Neil, this is kind of baked in the markets to a degree, I believe. But the more it’s talked about in, the more becomes a reality, more the market loves it. The scary thing I will tell you, though, is even if Chairman Powell wants to get out of this situation and say, hey, if data changes, maybe we’ll change our role or slow our roll, the markets freak out. So he’s got to stay in the path he is on for now at least.
CAVUTO: Do you think, Susan, that that’s another superhero analogy? If you think about it, he’s in that role, Chairman Powell, of being like the superhero is going to guard and protect the markets. And his stance over the last two days is where I’ve got your back, does he?
LI: Yeah, that’s exactly what you’ve heard. You’ve heard all the right things being that we’re going to stay low, lower for longer and continue buying more than one hundred billion dollars of bonds each and every month. And what I took away yesterday was at six percent GDP forecast that he made for twenty twenty-one, saying that the recovery in the back half of this year is going to be stronger than the first half. And that will be, by the way, pushed through by the Federal Reserve or the White House and the government printing more money. There will be trillions of dollars there that will liquidate the market. And as we say that, you have to follow the money and watch growth managers. And what the money is telling you is that it’s still going into stock markets that’s liquify. So I use the wrong verb there. But you know what I mean? Meaning that you have to follow where the money is going and it’s going into stock markets right now and risk assets.
CAVUTO: So real quickly, Scott, do you see that changing? I mean, give me sort of your lay of the land for at least the next few weeks here.
MARTIN: No. And we’re cautious as far as bonds go, Neil. So Susan’s right. Money goes into stocks as a result. It goes into Bitcoin, it goes into gold, which are things that appreciate when there’s so much Fed printing. And I love the numbers. Susan threw out six percent GDP growth. We’ve got an improving, improving economic picture, yet Fed funds rate at zero and the Fed’s buying one hundred billion a month. Hey, why not start the party and keep it going?
LI: And by the way, six percent, just my follow up on that, Neil, six percent is almost three times the average for the GDP growth that we’ve seen over the past ten years. So that’s a lot. That’s a big bet. That’s your V shape recovery right there.
CAVUTO: But do you think we’re coming from awful levels, right? So, yes, it is good. I’m not minimizing that. But again, you know, it’s coming from depressed levels, but we’ll see. Guys, thank you both very, very much.