Program: Your World with Cavuto
Station: Fox Business News
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.
Program: Cavuto Coast to Coast
Station: Fox News Channel
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?
Kingsview CIO Scott Martin discusses market expectations and the response to recent tech earnings reports.
Program: Cavuto Coast to Coast
Station: Fox Business News
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.
Kingsview CIO Scott Martin discusses how the stimulus has affected consumer demand in technology. He also addresses capital gains tax rates, income tax rates, and market volatility.
Program: Your World with Neil Cavuto
Station: Fox News Channel
NEIL CAVUTO: It is probably that more closely watched of earnings in general. Forget about this technology, because Apple has become a key economic barometer pretty much for the country and maybe the markets as a whole. Its sales and earnings sizzling in the latest quarter usually consider a slower quarter after the busy fourth quarter Christmas shopping season. But this one was just nothing less than a blowout. Overall sales at the fifty four percent higher than the year ago period, much stronger than they thought. Just to put it in some context, right now, the number of iPhones it sold sixty five percent more than last year, the number of iPads, about 70 percent more personal computers around seventy eight percent more after hours trading. The stock is jumping continue. A trend we’ve seen with the likes of Facebook and Alphabet, to a lesser extent with Microsoft to Art Hogan, National Securities Corporation, Scott Martin Kingsview Asset Management, Art to you first. What do you make of what’s happening with Apple? And more to the point, technology in general?
ART HOGAN: Right. You know Neil, one of the things we think about a lot as we sort of normalize the economy is how many of these companies really pulled forward a lot of demand because of the pandemic. We’re all working at home. We knew we need new laptops and iPads and phones, et cetera. And clearly this quarter shows that that’s not the case for Apple right now. They continue to create demand for their new products. And clearly, we’re just at the tip of the iceberg for the 5G rollout. What’s more interesting to me is that they just added 90 billion dollars to their current buyback program and that still has 30 billion left on it. So it’s a very shareholder friendly report right here. And the numbers just blew everybody away.
CAVUTO: Yeah, it’s increasing its dividend for a lot of our viewers who sort of get caught in this and want to know what does that mean? Obviously, when a company expresses enough confidence to buy its stock, that limits the available stock, lets the market go higher and all of that. But having said all of
that, Scott Martin, it is a good reflection on the American consumer, in this case, the global consumer as well, coming out of this pandemic. Not that they were hurting during it, but what do you make of that consumer’s appetite to buy, you know, items that aren’t necessarily cheap?
SCOTT MARTIN: It’s a great tailwind and some of that money, Neil, is coming for free in the mail or coming via direct deposit from your friends in Washington, D.C., makes those purchases probably a little easier now. Art made the point. And you did as well. I mean, we’re in the midst of the early innings, really, of a five G iPhone upgrade cycle. So that’s really, I think, what it’s showing up in this quarterly report. You know what else is interesting, though? That could be just pursuant to maybe more of that consumer demand that’s out there, Neal, is the services part of Apple, which really I mean, gosh, guys in the last few years has really taken on a life of its own. I mean, you’re talking about Apple, iCloud. You’re talking about the App Store. You’re talking about Apple Music and Apple Arcade, which, yes, I play at home with my kids. Those things are the high margin services products that the company has, Neil, and those are firing on all cylinders to. So this company, Soup to Nuts, is really taking care of business here and the stock price is reflecting it.
CAVUTO: You know, if I could just step back from this technology, the markets in general, are you bullish with all this because the markets, which are on a tear under Donald Trump, continue to build on that under Joe Biden. And I’m just wondering how long this goes on. Are there enough doubters out there, enough issues or worries to justify it? Usually when everyone capitulates and say, oh, the hell with it, I’m just writing this bull as long as he can go. What what do you tell people?
HOGAN: Well, I’ll tell you this, I think that interestingly, this has been one of those years where earnings estimates have gone higher during the quarter. That’s only happened twice in the last 10 years. So, you know, we’re clearly seeing the beginning of what’s going to be some pretty parabolic earnings growth and obviously GDP growth as the economy normalizes. So I don’t think we’ve been able to correctly factor in what the S&P 500 can earn next year. In the middle of last summer, we thought that was going to be about one hundred seventy two dollars. Coming into this morning, it looks like one hundred eighty six. And I bet you anything it’s going to be north of one hundred and ninety dollars for the S&P 500 earnings for twenty twenty one by
the end of this reporting season. And that means if you don’t even change the multiple, you get the forty three hundred in the S&P 500. So yeah, I think there’s there’s more tailwinds and headwinds right now. Now the stocks need to take a pause at some juncture. And I think we’ve had some rotational corrections technology sold off a month ago. It’s back in favor now. Cyclicals are selling off right now. They were very much in favor for the entirety of the first quarter. The Russell 2000 had an eight percent draw down its back in favor again. So I think what we’re seeing is rotational corrections, which makes it a very healthy market.
CAVUTO: You know, Scott, if I could throw out a very unhealthy development in Washington, maybe healthy as a market, see a stimulus, a stimulus, right. But trillions of dollars in spending, I notice Wall Street doesn’t have any discretion as to whether it’s coming through more spending or tax cuts, but they seem to like it just fine. If they’re worried about it, they have a funny way of showing it. What do you think?
MARTIN: Yeah, wild parties are fun until your parents come home. I think I know that from experience, maybe have a flashback or two, but that is a reality.
CAVUTO: I never went to parties I was very busy at home studying and as was Art. So we cannot relate to that.
MARTIN: I was the one who had the parties that nobody would come over to Neil. Yeah. So maybe we are in that same camp. But the reality is, Neil, DC, though, is addicted to this, just like students are departing in the sense of like they keep spending, they keep putting out these numbers, they keep keeping the consumer on the government dole until they can’t stop anymore. And so at some point, this does have to be paid for. I think we’re starting to see indications of that. Capital gains taxes, corporate tax rate hikes, income tax rate hikes, that stuff will definitely show up sooner than later. And that’s when I think we start to have some market volatility here.
CAVUTO: Art, a new investor, comes to you today and says, Art, I want it on this market, I’ve never been in on it, but I hear all these good things. I caught you and Scott last night and I want to I want in. What do you tell them?
HOGAN: You tell a new investor that you want to have a barbell approach in twenty twenty one, where on one end of that barbell you’re going to have thematic fast growth companies. 5G is one of those themes. Cloud computing and cloud security are two of those other themes. Apple falls into that category of 5G on the other end of that barbell. I want you to have exposure to economically sensitive cyclicals and we’re going to look at your portfolio and keep that barbell level every two months so that if technology is running ahead, we’re going to take profits and put it in the cyclicals. If you did that in 2020, you outperformed the S&P 500 by four hundred and seventy five basis points. And the same thing is holding true through the first quarter of this year. So I think that’s a new investor has to look at this as balanced and diversified.
CAVUTO: Yeah, it’s your perspective for me, I know for young people, it’s it’s longer term can be a ways know people like Scott, but for me, long term is lunch tomorrow. So we’ll have to sort that out. But, Art Scott, thank you both very, very much.