CIO Scott Martin discusses the indicators of recession, the job market, interest rates and taxes.
Program: Cavuto Coast to Coast
Station: Fox Business News
DAVID ASMAN: Kingsview Asset Management CIO Scott Martin joining me now. Scott, you look at all the stocks that that are kind of indicators of where the economy is going. That’s what Wal-Mart is. That’s what Lowe’s is. That’s what Target is. These were, as we were saying in the last hour, these were the safe socks stocks compared to to the Nasdaq stocks, the fly by nights, and they’re down 25%. Are you are we looking square in the face of a recession here?
SCOTT MARTIN: Yeah. The recession is here, David. I think you’re right. I think and I love what you’re talking about with Lauren there previous because you’re right. I mean, you look at Amazon, too. I’d throw that in there. David is a retail bellwether, consumer staple name to some degree for many of us. And I think the recessions here, we had negative GDP growth in Q1. I think Q2 is going to be right there with it. That’s why two, I think the markets, David, as we parse things out in the last couple of months, why they’ve been so negatively reactive to so-so data, you know, they started seeing through, I think, a lot of the data and realizing recession was here or coming. So the good news, though, is that the sooner we get through this, the sooner we’re going to get out of it. And I know that’s not much consolation for many of us who are holding stocks today that are down. But the sooner that we can kind of get through this malaise, the sooner that these falls are drops happen, the sooner the markets can recover and go up. It’s just hard to get through at times.
ASMAN: It’s a strange recession. And again, so it was 2009. So we’ve had some recent history of strange recessions. But one thing that’s so strange, we have such a surplus of jobs, usually recessions and and lowering job numbers go hand in hand. In this case, we still have that overhang of 11 million unfilled jobs. Are those going to dry up pretty quickly if we’re smack in the middle of a recession?
MARTIN: Some will, but it doesn’t matter if they do because you’ve got two jobs for every one person that’s looking for a job. So they have some room to do that. I think it’s a great call by you to say it’s a strange recession, which almost like write a song with that title because then you’ll be on vocals, of course, and me on keys. Because here’s the thing. I mean, I don’t want to sing in front of anybody ever again. But here’s the thing. You’re right, David. That also probably means, though, that this recession, because I believe it’s here, will be short and sweet in the sense of we’re not going to see that crazy real estate fallout we saw in oh nine the crazy drop that we saw in oh one. We had the tech crash, terrorist attacks. We had a big jobs recession back then, too. So this could be a short and shallow one. But the key aspect behind this, the man or woman, if you will, behind the curtain is Treasury Secretary Janet Yellen and Fed Chairman Chairman Jerome Powell. Because they’re raising interest rates, David, into a recession now pretty precipitously. So how does that shake out with respect to negative GDP growth? Two quarters in a row and we’ve got, what, about 200 basis points in hikes coming down the pike from the Fed?
ASMAN: You know, the that’s not the only thing they’re raising. They’re also raising the number of regulations we have to deal with, particularly in the energy industry. And that’s causing more inflation. That is to say, all of the pressures that are causing inflation are just increasing the policy pressures. So I don’t think we’re going to end the inflation thing any time soon. The recession may be short lived because of the the economy coming back online after the pandemic, but the inflation is going to remain with us and stubbornly really kind of put a cap on growth, don’t you agree?
MARTIN: I agree to some degree, I guess I could say. I mean, I think the inflation picture, though, is starting to peek out a bit. We’re still high.
ASMAN: Oh, I don’t.
MARTIN: We’re starting to slow that rate of growth. Well, I think we’re starting to slow the rate of growth, David. I mean, we’re we’re going.
ASMAN: To wholesale now, forgive me for interrupting, but look at the wholesale prices, which are are precede the retail price increases. We’re in double digits on wholesale prices.
MARTIN: Sure. And that’s true, David. But that’s also a reflection of the fact that we have supply chain issues that are starting to get worked out slowly but surely and likely coming as as a reflection of slower demand because of the recession that’s here or coming. So that will help hopefully relieve some pressure on prices. But still to that point about where inflation is going forward, how companies are trying to pass along, we saw target comment on that as well. It’s really impacting that tried and true tried and true consumer that’s been holding us up all through, say, the pandemic.
ASMAN: Yeah. Yeah. And part of the other craziness of this recession, if we’re in it already, is the fact that you have so few houses. So even though recessions really hurt the housing market and it may hurt this time as well, because we have such a dearth of product of inventory in housing that may be secure if particularly if it’s a short lived recession. But it’s interesting, you’re the second market analyst we said we’ve had on who said it’s virtually 100% sure that we’ve got a recession coming. So it’s it’s not good news, but we’re going to have to learn to live with it. Good to see you, Scott.
MARTIN: Sooner the better. We’ll get up it quicker. See you David.
ASMAN: Thank you, Scott Martin, my friend. Thank you.
Kingsview CIO Scott Martin discusses food inflation, employment and whether the job market may be normalizing.
Program: Your World with Cavuto
Station: Fox Business News
NEIL CAVUTO: Forget about not even born, I mean, you don’t he doesn’t even remember a bear market, that’s next guy. Scott Martin Fox Business Contributor But again, an uncanny read of these markets for a young whippersnapper, Scott. You know, they’re mentioning the inflation word again and they’re saying, you know, be prepared for it sticking around a while. Are you in that camp?
SCOTT MARTIN: In parts of that camp, Neil, I think the gasoline concerns are definitely there and going to stay there, the food and some of the materials, I’m not so sure now. It’s funny the things that Lydia was talking about, Neil. It’s kind of things that we should probably be eating less of anyway. So maybe the inflation is doing a favor for us. I mean, personal story. I may or may not have brought some Golden Oreos with me to the studio today. You never know. The point is, you go to the store now, man used to be able to buy those Golden Oreos in the pack, and they had about sixty in them, for about you know, five bucks or something. Now you’re down to about 40 for a higher price. We probably don’t need to be eating 60 of those things anyway in a setting. So for my sake, some of the food inflation might actually maybe force us to make some healthier choices. Oh my gosh.
CAVUTO: Well, I don’t don’t go nuts here, but I don’t relate to this because, you know, I haven’t noticed the same run-up in prices in arugula, but you could be right. Yeah. But you know, I’m wondering because when inflation takes hold, it has a devil of the time sort of easing back. And we saw that from the 70s experience. Not that I think that that is necessarily the case now. But what do you look for that would at least get you thinking maybe this is more of a problem than I thought?
MARTIN: I think the secret Neil lies in the job market. I think it basically pans itself out in wage inflation because our good buddy, Milton Friedman, who yes, I’ve read about didn’t actually get a chance to meet him, which was the old talk of saying, you know, inflation is basically a monetary phenomenon. It’s too much money chasing too few of goods. We definitely have to feel good. I mean that that’s evident everywhere around the country today. But the wage thing that too much money chasing those goods may or may not be really the case here. So I think until that pans out to where we have both sides of those things fighting it out, I think that’s why I still think Jay Powell has it right. I think a lot of this stuff is transitory. It’s probably lasting a little bit longer than a lot of folks predicted. But we’re going to start to see we’ve got a jobs number tomorrow. I’m going to start to see those wage numbers, I believe calmed down as the job market maybe normalizes here.
CAVUTO: All right. We’ll see what happens. Scott Martin, great catching up with you and great relying on the expertise these last few years here, even though you weren’t alive when we started. But it’s good. Good that you’re alive right now.